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Download Term Sheet
FANNIE MAE® DUS
Mod Rehab Supplemental Mortgage Loan for Affordable Properties
Subordinate financing options for affordable multifamily properties that have completed moderate rehabilitation.
BENEFITS
- Great value-add option for M.TEB execution.
- The Mod Rehab Supplemental Mortgage Loan is excluded from the one Supplemental loan rule.
- Loan sizing is comparable to the first lien mortgage loan.
- Lower pricing than generally available on other Supplemental Mortgage Loans.
- Lower cost than refinancing.
- Access to additional capital.
- Certainty of execution.
- Speed in processing and underwriting.
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ELIGIBILITY
- First Mortgage Loan or BCE identified as Mod Rehab.
- Existing Fannie Mae fixed-rate or adjustable-rate mortgage loans or BCEs.
- Lender must be the servicer of the existing Fannie Mae Mortgage Loan or BCE.
- Fannie Mae must be the only senior debt holder on the property.
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TERM
5-30 years; must be coterminous with the senior Mortgage Loan or Bond Credit Enhancement Mortgage Loan (BCE).
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AMORTIZATION
Up to 35 years.
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INTEREST RATE
Fixed- and variable-rate options available.
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MAXIMUM LTV
- Up to 85%, depending upon the MAH execution type.
- Up to 90% for earn outs and select other cases.
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MINIMUM DSCR
As low as 1.15x, depending upon the MAH execution type.
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MOD REHAB SUPPLEMENTAL MORTGAGE LOAN TIMING
Within 36 months of origination of the Mod Rehab first mortgage loan or BCE. No one-year waiting period.
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RATE LOCK
30- to 180-day commitments. Borrowers may lock a rate with the Streamlined Rate Lock option.
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ACCRUAL
30/360 and Actual/360.
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RECOURSE
Non-recourse execution with standard carve-outs required for “bad acts” such as fraud and bankruptcy.
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ESCROWS
Replacement reserve, tax and insurance escrows are typically required, based on the resulting Tier of the combined Pre-Existing Mortgage Loan or BCE and Moderate Rehabilitation Supplemental Mortgage Loan.
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THIRD-PARTY REPORTS
Standard third-party reports, including Phase I Environmental Site Assessment and a Property Condition Assessment, may not be required if certain conditions are met.
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ASSUMPTION
Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience.
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TIER-DROPPING
Permitted for fixed-rate Moderate Rehab Supplemental Mortgage Loans.
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REHABILITATION REQUIREMENTS
Completed at least $8,000/unit of property improvements.
As a best practice, at least 60% of renovation budget allocated to interior unit improvements. -
VERIFICATION OF PROPERTY IMPROVEMENTS
Lender must document all completed rehabilitation work and verify its completion through a site inspection if the work is not performed pursuant to a Completion/Repair Agreement or a Rehabilitation Reserve Agreement.
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.