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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
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