|Freddie Mac Tax-Exempt Bond Credit Enhancement
Kendall Realty Advisors
Tax-Exempt Bond Credit Enhancement of Apartment Properties Fixed and
Variable-Rate Options - Commercial Mortgage
Credit enhancement of apartment properties financed with tax-exempt bonds where the affordable
unit set aside is at least 20% at 50% or 40% at 60% of area median income (adjusted for family
size). Typically these properties will have a 4% Low Income Housing Tax Credits.
Can be used in combination with Affordable Housing Forward Commitment program. Funded and
unfunded forward commitments are available.
Typically 30-year term.
PREFERRED LOAN SIZE:
$3 million and larger.
Amount equal to the lesser of:
1. 90% of appraised value (85% of favorable financing value or 90% with HUD risk sharing); or
2. 1.20 debt service coverage (1.15 with HUD risk sharing).
1. 85% of appraised value (80% of adjusted value); or
2. 1.20 debt service coverage based on the Underwriting Interest Rate. The Underwriting
Interest Rate is at least 200 basis points over the 52 week trailing average of the Bond
Market Association (BMA) Municipal Swap Index, plus credit enhancement fees and all
ongoing fees such as annual issuer and trustee fees.
FIXED RATE STRUCTURE:
Rate fixed to maturity of the bonds.
VARIABLE RATE STRUCTURE:
Weekly Rate Mode, with option to convert to fixed-rate.
An interest rate cap or interest rate swap is required for variable-rate transactions.
None, except for standard exceptions to non-recourse which are the responsibility of the Key
Assumable, subject to approval and a 1% transfer fee.
Fixed: Lockout and prepayment provisions typically correspond to the tax-exempt bond requirements
and the present value of any unpaid Freddie Mac credit enhancement fees plus any unpaid lender
servicing fees during the first ten years.
Variable: Equal to the present value of any unpaid Freddie Mac credit enhancement and liquidity fees
and any unpaid lender servicing fees during the first seven to ten years.
Subordinate financing may be allowed under certain circumstances.
125% to 150% of estimated cost of required repairs, if any, as determined by physical inspection.
Monthly escrows for real estate taxes, property insurance and replacement reserves are required.
DUE DILIGENCE FEE:
The greater of $3,000 or 0.1% at maximum loan amount.
Based on estimated underwriting costs for appraisal, architectural / engineering report, market study,
environmental assessment and other loan processing costs.
Standard transaction costs, including legal fees, title insurance and survey.
PRELIMINARY SUBMISSION PACKAGE:
Include the following in your request for a loan quote:
1. Property description and location map.
2. Representative color photographs.
3. Current rent roll and year-to-date operating statement.
4. Operating history - prior 3 years, if available.
5. Current year operating budget.
6. Existing debt and cost basis.
7. Sponsor resume.