![]() ![]() citizens only), limited liability companies, limited partnerships, Single Asset Entities, Special Purpose Entities, tenancies in common (with up to five unrelated members), and Trusts (irrevocable trusts and revocable trusts with an individual guarantor.)īorrowers more than $6 million: Single Asset Entities. Replacement Reserves: Vary between $200-$300 per unit, per year, based on rating determined in streamlined physical risk report.īorrowers up to $6 million: Individuals (U.S. Interest Rates: Vary, but lower for properties in Top and Standard Markets and higher for properties in Small and Very Small Markets. Partial and full interest-only options available for highly-qualified borrowers Recourse: Non-recourse with standard bad-boy carve-outs for situations like fraud and intentional bankruptcy (carve-out waiver available with min. Loan Uses: Acquisitions or refinances under 100 units (over 100 units may be allowed with approval from Freddie Mac)Ģ0-year hybrid ARM with initial 5, 7, or 10-year fixed-rate period, ORĪRMs typically based on 6-month LIBOR with up to 1% rate adjustments every 6 months. Loan Amount: $1 million minimum, $7.5 million maximum, $6 million - $7.5 million in Small and Very Small Markets may be permitted subject to Freddie Mac’s approval. Non-Freddie Mac subordinate debt is not permitted. Replacement reserves of between $200-300 per unit, per year, are typically required. May offer lower leverage and require higher debt service ratios than bank, CMBS, and traditional Fannie and Freddie financing for properties in Small or Very Small Markets.īorrowers must generally pass stricter background checks than for other Fannie Mae or Freddie Mac multifamily loans.Ĭannot be used with HUD Section 8 properties. The sponsor needs a net worth of 100% of the loan amount (excluding primary residence), generally with 10% liquidity. Real estate tax escrows are deferred for deals with an LTV ratio of 65% or lessįreddie Mac Supplemental Loans may be allowed in some situations.Īllows properties with up to 50% concentration of student or military housing. Wide variety of fixed and floating-rate options, including interest-only (I/O) options.Ĭan be used with some affordable housing programs. ![]() Loans are non-recourse with bad boy carve-outs. Pros and Cons of Freddie Mac Multifamily Small Balance LoansĪs with any loan program, Fannie Mae Small Loans have a variety of pros and cons, these include: Pros": Interest-only (I/O) options are also available in some situations. The Freddie Mac SBL Program provides a variety of fixed and floating-rate loan options with 5, 7, and 10-year terms. ![]() In addition, it should be noted that, like most Fannie and Freddie multifamily options, Freddie Mac SBL loans are fully assumable with a 1% fee for qualified borrowers. This stands in stark contrast to lending options like CMBS financing, in which loans are handled by a separate servicer and a special servicer in default situations, which can often end in disaster for borrowers. This typically means easier communication, since you already have an established relationship and more options when it comes to loan workouts and other special situations. In addition to faster closings and less paperwork, Freddie Mac guarantees that your lender will also be your servicer throughout the entire life of your loan. Since the Freddie Mac SBL program’s inception in 2009, Freddie Mac Multifamily has originated over $33 billion of Small Balance Loans, meaning that the product has made a significant contribution to the multifamily lending market. Via the Freddie Mac Optigo program, Freddie Mac has authorized 12 Optigo lenders nationwide to offer these loans, which can close faster and require significantly less red tape than traditional Freddie Mac multifamily financing. Freddie Mac SBL financing is available nationwide, so borrowers from Florida to Alaska can benefit from this generous and quickly expanding apartment loan program.ĭue to its flexible nature, the Freddie Mac Small Balance Loan is currently one of the most popular types of small balance apartment loans on the market today. The Freddie Mac SBL loan program was designed specifically for apartment investors looking to borrow between $1 million and $7.5 million to purchase or refinance stabilized multifamily properties.
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