Great HUD program for multi-family developments.

By
Mortgage and Lending with Global Solutions

Even in this tough market there are programs out there with money available. This HUD program is great for developers who are searching for money(which there are PLENTY of). My lender has plenty of money to lend using HUD programs and employs a HUD underwriter with more than 20 years experience.

This program is NOT for SFR construction. It has to be multi-family(town homes/multi-family), which is actually better for the developer in this market.

Rates are in currently in the 6s with an LTV up to 90% and 40 year perm loan!

Minimum loan amount: 3 Million

Let me know if you have any questions: Darryl@glblsolutions.com

ELIGIBLE PROJECTS:
a) Transaction must be either new construction or substantial rehabilitation.
b) Must consist of five (5) or more dwelling units and be comprised of detached, semi-detached, row-type townhouses or multifamily structures (walk-up or elevator).
c) Must be situated on one site. However, the site may consist of two or more non-contiguous parcels (scattered sites) with HUD approval.
d) Must comply with all applicable zoning and/or deed restrictions.
e) Must be designed for residential use.
f) Must be free and clear of all liens other than the insured mortgage. NOTE: HUD may permit an inferior lien made or held by a Federal, State or Local government agency or instrumentality.

TENANT SELECTION:
Occupancy is not restricted on the basis of tenant income. All families and individuals subject to normal tenant selection procedures are eligible for occupancy. There are no income restrictions unless:
a) the project is subsidized by HUD i.e. via Section 8 Rent Subsidies, or
b) the mortgage is financed through tax-exempt bonds, or
c) the borrower receives Low Income Housing Tax Credits (LIHTC), Historic Preservation Tax Credits, or HOME Funds.

ELIGIBLE BORROWERS:
The following types of borrowers are eligible for participation in the Section 221(d)(4) program:
a) General - any borrower/borrowing entity approved by HUD, which may include for-profit entities, individuals, corporations, general or limited partnerships, and limited liability corporations (LLC's).
b) Non-Profit - an entity organized for reasons other than financial gain and not controlled or directed by persons or firms seeking financial gain. The non-profit entity must be regulated under Federal or State law, i.e. 501(c)(3).
c) Builder-Seller - an entity organized to build or rehabilitate a project and which, by written agreement with a non-profit, will sell the project to the non-profit for no more than the HUD-approved certified cost.
NOTE: all entities created to be the borrower under a HUD-insured mortgage transaction must be single asset entities.

MORTGAGE LIMITS:
New Construction & Substantial Rehabilitation - the maximum loan amount is the lesser of:
a) Amount requested by mortgagor
b) 90% of loan to total replacement cost, less grants (if any)
c) Maximum loan supportable by Net Operating Income (NOI) at a 1.11 debt service coverage
d) Statutory Limits adjusted by HUD's High Cost Factor for geographical location

UNDERWRITING CONSIDERATIONS/FEATURES:
a) 40-year, level annuity payment, fully amortized permanent loan term.
b) Fixed rate of interest during both construction and permanent loan terms. Permanent loan rate fixed at closing of construction loan.
c) Up to 36-months interest only during construction.
d) Minimum of five percent (5%) vacancy factor.
e) No personal liability on construction or permanent loan.
f) Permanent loans are prepayable.
g) Permanent loans are assumable.
h) No lease-up or other occupancy requirements prior to conversation to the permanent loan.
i) No limit on number of loans to one borrower

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Rainer
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Darryl Dahlen

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