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Download Term Sheet
FREDDIE MAC OPTIGO®
Bond Credit Enhancement with 4% LIHTC
Freddie Mac’s Bond Credit Enhancement program with 4 percent Low-Income Housing Tax Credits (LIHTC) provides for the preservation of the affordable housing stock with flexibility
in transaction structuring and certainty of execution at a lower cost to the borrower.
Get the financing borrowers need for affordable multifamily properties funded by the sale of fixed-or variable-rate tax-exempt bonds that have received LIHTC—whether it’s for new construction,
a moderate or major rehabilitation, or the acquisition or refinancing of stabilized properties.
FUNDS PROVIDED BY TAX-EXEMPT BOND PROCEEDS
FORWARD COMMITMENT
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ELIGIBLE PROPERTY TYPES
To-be-built or substantially rehabilitated garden, mid-rise, or high-rise multifamily properties with 4% LIHTC.
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TERMS
- Minimum term: Remaining LIHTC compliance period or 15 years, whichever is less.
- Maximum term: 35 years.
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PRODUCT DESCRIPTION
Bond credit enhancement for new construction or substantial rehabilitation of affordable multifamily properties with 4% LIHTC.
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TYPE OF FUNDING
Bond credit enhancement available during construction phase (funded forward); letter of credit collateral required during construction phase; bond credit enhancement during permanent phase following successful conversion.
Forward commitment to provide bond credit enhancement upon successful conversion from construction phase to permanent phase
(unfunded forward). -
MINIMUM DEBT COVERAGE RATIO1 (DCR)
- Variable-rate with cap hedge: 1.20x.
- Fixed-rate: 1.15x.
-
MAXIMUM LOAN-TO-VALUE (LTV) RATIO2
- Variable-rate with cap hedge: 80% of adjusted value or 85%of market value.
- Fixed-rate: 85% of adjusted value or 90%of market value.
-
CONSTRUCTION LOAN TERM
Maximum forward commitment term: 36 months plus a free 6-month extension during construction period.
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MAXIMUM AMORTIZATION
35 years.
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PREPAYMENT PROVISIONS
Fee maintenance.
-
SUBORDINATE FINANCING
Permitted.
-
TAX AND INSURANCE ESCROWS
Required.
-
FEES
Application fee, commitment fee, credit facility fee, plus other fees as applicable.
IMMEDIATE FUNDING
-
ELIGIBLE PROPERTY TYPES
Garden, mid-rise, or high-rise multifamily properties with 4% LIHTC that maintain 90% occupancy for 90 days.
-
TERMS
- Minimum term: Remaining LIHTC compliance period or 15 years, whichever is less.
- Maximum term: 35 years.
-
PRODUCT DESCRIPTION
Bond credit enhancement for the acquisition or refinance of stabilized affordable multifamily properties with 4% LIHTC with at least 7 years remaining in the LIHTC compliance period.
-
TYPE OF FUNDING
Bond credit enhancement for fixed-or variable-rate tax-exempt bonds.
-
MINIMUM DEBT COVERAGE RATIO1 (DCR)
- Variable-rate with cap hedge: 1.20x.
- Fixed-rate: 1.15x.
-
MAXIMUM LOAN-TO-VALUE (LTV) RATIO2
- Variable-rate with cap hedge: 80% of adjusted value or 85%of market value.
- Fixed-rate: 85% of adjusted value or 90%of market value.
-
CONSTRUCTION LOAN TERM
N/A.
-
MAXIMUM AMORTIZATION
35 years.
-
PREPAYMENT PROVISIONS
Fee maintenance.
-
SUBORDINATE FINANCING
Permitted.
-
TAX AND INSURANCE ESCROWS
Required.
-
FEES
Application fee, commitment fee, credit facility fee, plus other fees as applicable.
PRESERVATION REHABILITATION
-
ELIGIBLE PROPERTY TYPES
Garden, mid-rise, or high-rise multifamily properties with 4% LIHTC undergoing moderate rehabilitation with tenants in place.
-
TERMS
- Minimum term: Remaining LIHTC compliance period or 15 years, whichever is less.
- Maximum term: 35 years.
- Rehabilitation/stabilization period (at a maximum of 24 months) will be included in loan term.
-
PRODUCT DESCRIPTION
Bond credit enhancement provided for the moderate rehabilitation of affordable multifamily properties with new 4% LIHTC and tenants in place.
-
TYPE OF FUNDING
Bond credit enhancement for acquisition/rehabilitation based on projected post-rehab net operating income (NOI); cash or letter of credit collateral required to fund gap between supportable debt on current NOI and bond mortgage loan amount (collateral held until stabilization); interest only available during the rehabilitation/stabilization period.
-
MINIMUM DEBT COVERAGE RATIO1 (DCR)
- Variable-rate with cap hedge: 1.20x.
- Fixed-rate: 1.15x.
-
MAXIMUM LOAN-TO-VALUE (LTV) RATIO2
- Variable-rate with cap hedge: 80% of adjusted value or 85%of market value.
- Fixed-rate: 85% of adjusted value or 90%of market value.
-
CONSTRUCTION LOAN TERM
N/A.
-
MAXIMUM AMORTIZATION
35 years.
-
PREPAYMENT PROVISIONS
Fee maintenance.
-
SUBORDINATE FINANCING
Permitted.
-
TAX AND INSURANCE ESCROWS
Required.
-
FEES
Application fee, commitment fee, credit facility fee, plus other fees as applicable.
1May include bond refunding, substitution, or new issue transactions with 80-20 bonds, taxable bonds in combination with tax-exempt bonds, 501(c)(3) bonds, Section 8, Section 236, tax abatements and LIHTC.
2Adjustments may be made depending on the property, product and/or market.
In its prequalifying review, Lument will attempt to estimate both the loan amount and the fees and costs associated with the transaction. Actual loan amounts and actual fees and expenses may vary from the prequalifying estimates. A prequalifying estimate is not a commitment to make a loan.