Fannie Mae Moderate Rehabilitation Loan Program
Non-recourse, assumable financing for the acquisition or refinance of any asset class with planned capital improvements in excess of $8,000 per unit for the entire property.
Rehabilitation Restriction: At least 60% of renovation budget allocated to interior unit improvements. Must be completed within 36 months of Mortgage Loan Origination Date
Underwriting: Amount of rehab per unit based on total number of residential units, rather than number of units being rehabilitated
Loan Amount: Minimum $10,000,000
Loan Terms: 5-30 years
Loan to Value Maximum: 80%
Coverage Minimum: 1.25x
Interest Rate: Risk-based pricing
Prepayment: Flexible
Completion Repair & Rehabilitation Reserve Agreement: If $20,000+ per unit repairs, Rehabilitation Work Evaluation Report required. Completion Repair Guaranty that covers entire scope of rehabilitation work required. Borrower must execute a Modifications to Multifamily Loan and Security Agreement and must: 1) identify on the Rehabilitation Work Schedule the planned scope of the Rehabilitation Work, including all of the Rehabilitation Work items, estimated costs, allowance for cost overruns and completion dates; and 2) complete a budget for the planned Rehabilitation Work and fund into the Rehabilitation Reserve Account: the entire budgeted amount of all Rehabilitation Work not identified as Completion/Repairs by the PCA.
Third Party Reports: MAI Appraisal, Physical Needs Assessment, and Environmental Phase I Assessment
Reserves: Tax and Insurance escrows required; Repair and Replacement escrow funding required.
Application Fee: $25,000 covers third party reports and processing/underwriting costs
Origination Fee: Competitive
Legal Fees: $15,000 to $20,000 varying with characteristics of transaction
Timing: 45-60 days from application to commitment; dependent on third party report timing and borrower’s submission of due diligence
Rate lock after borrower’s acceptance of commitment
Assumability: subject to lender approval of proposed replacement borrower
Supplemental: Available 12 months after closing, in addition to mod rehab supplemental available 36 months after closing (see below)
Mod Rehab Supplemental:
- Eligible properties: Existing Fannie Mae fixed- or adjustable-rate loans within 36 months of acquisition of the Mod Rehab eligible first mortgage loan.
- Term: 5-30 years to coincide with terms of initial loan
- LTV: Up to 75% depending on asset class and use of proceeds
- Minimum DSCR: 1.25x depending on asset class and use of proceeds
- Delegation: Yes
- Loan Timing: No one-year waiting period
- Tier Dropping: Allowed subject to Fannie Mae approval
- Interest Rate: Fixed or variable
