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Download Term Sheet
FANNIE MAE® DUS
Tax-Exempt Bond Credit Enhancement
We provide credit enhancement for tax-exempt bonds issued to finance the acquisition, new construction, refinancing, or moderate to substantial rehabilitation of multifamily properties.
BENEFITS
- Low borrowing cost, “AA+” rating keeps the interest rates on bonds low.
- Supports affordable rental housing stock.
- Flexible structures.
- Certainty and speed of execution.
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ELIGIBILITY
- Multifamily Affordable Housing (MAH) properties with 4% Low-Income Housing Tax Credit (LIHTC) rent restrictions.
- New money issues, refundings, or credit substitutions.
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TERM
10 – 30 years (minimum 15 years for new construction and substantial rehabilitation).
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AMORTIZATION
Up to 35 years.
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INTEREST RATE
Fixed-rate.
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MAXIMUM LTV
- 90% for 4% LIHTC properties with at least 90% of the units meeting affordability requirements.
- 85% for 4% LIHTC properties with less than 90% of the units meeting affordability requirements.
- 80% for refundings.
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MINIMUM DSCR
- 1.15x for 4% LIHTC properties with at least 90% of the units meeting affordability requirements.
- 1.20x for 4% LIHTC properties with less than 90% of the units meeting affordability requirements and for refundings.
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PREPAYMENT AVAILABILITY
Flexible prepayment options available.
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THIRD-PARTY SUBORDINATE FINANCING
Hard subordinate debt (which requires scheduled repayment of principal) is permitted only if provided by a public, quasi-public, or not-for-profit lender and combined debt service coverage cannot fall below 1.05x. Soft subordinate debt is permitted subject to requirements which include capping payments at 75% of available Property cash flow after payment of senior liens and Property operating expenses.
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RECOURSE
Non-recourse execution is available with standard carve-outs for “bad acts” such as fraud and bankruptcy.
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ESCROWS
Replacement reserve, tax, and insurance escrows are typically required.
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THIRD PARTY REPORTS
Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.
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ADDITIONAL CONSIDERATIONS
The Credit Enhancement Instrument issued by Fannie Mae is provided in accordance with the terms of a Reimbursement Agreement between the borrower and Fannie Mae, among other documents.
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.