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Commercial Real Estate Division

Commercial Real Estate - Freddie mac

Freddie Mac Multifamily Small Loan Program Guidelines:

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Eligible Properties:

  • 5+ unit multifamily. A and B class assets with C class assets considered on a deal by deal basis. No restricted markets; however, eligibility may vary for sub markets considered as being higher risk. Non-contiguous properties are acceptable if they are being operated as one and each property meets the minimum LTV, DSCR and occupancy requirements.

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Ineligible Properties:

  • Properties with a HAP contract or LURA are eligible on a deal by deal basis. Section 8 voucher acceptable. Properties with a specific tenant concentration (e.g. students, military) greater than 40%.

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Loan Size:

  • $1,000,000 - $6,000,000. With Freddie Mac approval, loans between $6MM and $7.5MM are available in Top and Standard Markets, provided they meet the following additional criteria:

    • ​75 units or less

    • 1.25 minimum DSCR

    • Single Asset Entity (SAE) borrower with enhanced borrower covenants and quarterly reporting

    • Enhanced third reports, e.g. full appraisal, zoning report, survey

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Maximum Loan-to-Value:

  • ​​80% LTV.

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Maximum CLTV:

  • 100% is possible with Joint Venture

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Eligible Locations:

  • All 50 states, Puerto Rico, U.S. Virgin Islands, and Guam.

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Fixed Rate Term:

  • 5, 7 and 10 years

  • Interest Only Available

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Amortization:

  • 30 years. 

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Minimum DSCR:

  • 1.25. 1.20 in Major Markets.

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Prepayment Penalty:

  • 5 year fixed term: 5,4,3,2,1. Can be reduced with rate increase.

  • 7 year fixed term: 5,5,4,4,3,2,1. Can be reduced with rate increase.

  • 10 year fixed term: 5,5,4,4,3,3,2,2,1,1. Can be reduced with rate increase.

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Guarantee:

  • Non-recourse for most loans subject to standard carve-outs.

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Assumable:

  • Yes, subject to lender approval.

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Escrows:

  • Tax and insurance required on higher leveraged loans.

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Third Party Reports:

  • Appraisal, Market Study, Phase I Environmental, Engineering Report and Seismic where applicable.  

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Sponsor Requirements:

  • 650 minimum credit score

  • Collective net worth of key principals must exceed loan amount

  • Minimum liquidity of nine months debt service

  • Local ownership no prior multifamily experience required

  • Absentee ownership requires two years comparable multifamily ownership experience

 

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