Fannie Mae DUS® Bond Credit Enhancement Loan
Terms
Description
Fannie Mae provides credit enhancement for tax-exempt multifamily housing revenue bonds that have low- and moderate-income occupancy restrictions; Fixed rate bonds can be enhanced; Enhancement is rated AA, and can be used in either a new bond issuance, “Refunding,” or a “Credit Substitution”
Loan Amount Minimum
$5,000,000
Loan Terms
10 to 30 years
Amortization
Up to 30 years
Loan to Value Maximum
The greater of 90% of market value or 80% of adjusted value for properties with LIHTC units equal to or above 90%; the greater of 85% of market value or 75% of adjusted value for all others
Coverage Minimum
1.15x for properties with LIHTC units equal to or above 90%; 1.20x for all others
Borrower
Domestic single asset borrowing entity is required
Interest Rate
Risk-based pricing, varies with LTV and DSC ratios
Third Party Reports
MAI appraisal, Physical Needs Assessment, and Environmental Phase I Assessment are required for all deals; Seismic Report is required for properties in Seismic Zone 3 or 4 with other characteristics; A market
study may also be required
Reserves
Tax and insurance escrows are required; Repair and Replacement escrow funding is required based on engineer’s Physical Needs Assessment; For loans at less than 65% of value with no deferred maintenance, funding of repair and replacement reserve can be waived, at lender’s discretion
Additional Terms
Application and Due Diligence Fees
- $2,500 non-refundable Application Fee to cover internal underwriting costs
- $12,500 Due Diligence Fee to cover third party reporting
Origination Fee
Fannie Mae requires minimum origination fee equal to one percent of loan amount; can be reduced for loans over $9 million
Timing
Timing is dependent on type of credit enhancement, status of bonds, 3rd party report timing and borrower’s submission of due diligence