CRE Sales Deal Volume Returning to 'Normal' Levels - CoStar Group
The current transaction pace is very similar to that of the second half of 2002, with nearly identical third quarter volumes and likely comparable fourth quarter trading levels as well, according to Jones Lang LaSalle. The activity in both time frames is representative of more normalized, sustainable levels - much lower than the unprecedented lofty levels of the 2005 to 2007 boom, and much greater than the sales drought in 2009.
FHA 223(f) Apartment Refinance Lender
312 Florence Ave. Evanston, IL 60202
Thursday, January 6, 2011
Saturday, August 7, 2010
FNMA DUS Apartment Loan Rates are near historice lows
FNMA DUS Large Apartment Loan Rates are near historic lows.
Rates are in the low 5% range for fixed rate non-recourse commercial 10 year apartment loans. FNMA large loans are available nationally for owners seeking $5,000,000 or more, for the purchase or refinance of apartment complexes.
The Small Loan program for loans under $5,000,000 is a great program for borrowers looking to lock in low rates for ten years. Rates for small loans are around 5.5% fixed for ten years. These loan are for properties of 5 or more units with loans from $750,000 to $5,000,000 in the Chicago area.
Rates are in the low 5% range for fixed rate non-recourse commercial 10 year apartment loans. FNMA large loans are available nationally for owners seeking $5,000,000 or more, for the purchase or refinance of apartment complexes.
The Small Loan program for loans under $5,000,000 is a great program for borrowers looking to lock in low rates for ten years. Rates for small loans are around 5.5% fixed for ten years. These loan are for properties of 5 or more units with loans from $750,000 to $5,000,000 in the Chicago area.
Monday, July 12, 2010
Small Loans FHA 223 F Rate Update
The FNMA Small loan program for Chicago is working well. Rates are in the high 5% and loans are closing in about 60 days from start to finis. The loan application cost is only $4,500 for all reports.
FHA 223 F rates have dropped below 5% all in for 35 year fixed rate loan these transactions take at least 4 months to process and the application fees run closer to $20,000 for most transactions plus FHA's application fee.
FHA 223 F rates have dropped below 5% all in for 35 year fixed rate loan these transactions take at least 4 months to process and the application fees run closer to $20,000 for most transactions plus FHA's application fee.
Tuesday, September 22, 2009
FHA 223(f) Apartment Refinance Rates
FHA 223(f) apartment refinance rates are about 5% plus .45% MIP.
FHA is now accepting waiver requests for new construction take out loans.
The property needs a certificate of occupancy and should have good occupancy for loan amount purposes.
FHA is now accepting waiver requests for new construction take out loans.
The property needs a certificate of occupancy and should have good occupancy for loan amount purposes.
Wednesday, February 18, 2009
FHA 223 f, FHA 221 D4 and Conventional Loan Programs
We offer all the long term fixed rate loans programs available in this market.
Call Scott at (847) 903-7578 or Chuck at (773) 259-7074
Call Scott at (847) 903-7578 or Chuck at (773) 259-7074
Thursday, February 12, 2009
FHA Three year rule waivers
February 6, 2009
MORTGAGEE LETTER 2009-06
TO: All FHA-Approved Multifamily Mortgagees
SUBJECT: Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f)
Purpose
This mortgagee letter sets forth the Department’s policy to grant temporary authority to Multifamily Hub Directors to grant waivers of the Three Year Rule for Section 223(f) (MAP Guide, Section 3.8.a Eligible Property), for the purpose of providing liquidity to recently constructed, self sustaining properties that are unable to secure permanent long term financing due to the freeze in the capital markets. This mortgagee letter will benefit applications that meet all of the qualifications of the Section 223(f) program, except for the fact that the property was originally constructed or substantially rehabilitated less than three years prior to the date of application for Firm Commitment. Eligible applications will have a Certificate of Occupancy dated no later than July 31, 2008. The waiver authority granted under this Mortgagee Letter expires six months from publication. The Department will evaluate the effectiveness of this waiver authority based upon applications received and may elect to extend the program based upon that evaluation.
Background
A number of fully operating, self sustaining properties, which have recently been constructed or rehabilitated, are now unable to secure permanent long-term financing due to the freeze in the capital markets. At this time, the Department recognizes the need to provide liquidity to the market place. In order to do so, waiver authority of the Section 223(f) eligibility restriction to properties that have been completed or substantially rehabilitated for 3 years prior to the date of application is required. Historically, Section 223(f) program requirements have been temporarily modified to better meet program goals when economic conditions greatly decreased the availability of credit. When the Section 223(f) Handbook was originally published, it set forth a Special Eligibility Program that was applicable to recently completed projects, where construction was started before June 30, 1974 and completed before the end of 1975. This special program was implemented to address liquidity shortages prevailing in multifamily real estate financing at that time that prevented otherwise sound projects from obtaining permanent financing. The existing capital market credit freeze is similarly constraining the availability of permanent financing today. This Mortgagee Letter provides relief similar to that provided in 1974, but also includes additional requirements to ensure that the properties are viable, self sustaining and will not jeopardize the long term financial stability of the Section 223(f) program.
Waiver Authority
As of the date of this Mortgagee Letter, Hub Directors will have temporary authority to waive the Three-Year Rule for the Section 223(f) program for a six month period subject to the conditions and processing instructions below. The requirements of this Mortgagee Letter may not be waived by Hub Directors.
Conditions
1. This waiver authority applies only to the refinancing of conventionally funded projects that were originally constructed or substantially rehabilitated less than three years prior to the date of application for Firm Commitment and that have a Certificate of Occupancy for the entire project dated no later than July 31, 2008.
2. Projects that previously applied for mortgage insurance under other HUD programs and withdrew their applications are ineligible.
3. Any prepayment restriction associated with the new Section 223f financing must be discussed with the applicant.
4. The final mortgage amount shall only be sufficient to pay off existing indebtedness, as defined in Chapter 8.9.E of the MAP Guide and may not include an equity payment to the owner.
5. All other applicable program requirements for the Section 223(f) program must be met, including compliance with Chapter 10.8 of the MAP Guide that pertains to the nondiscrimination provisions of the Fair Housing Act, along with Executive Order 11063 and Appendix 5c, Paragraph E that concerns accessibility requirements for persons with disabilities.
6. The applicant must submit documentation evidencing that efforts to obtain permanent conventional financing have been unsuccessful, or that current offers of conventional financing have been canceled. This documentation should include rejection letters from prospective lenders or cancellation letters from lenders that had previously committed financing.
7. The applicant must submit evidence that all interest and/or debt service payments have been made on time since the beginning of the current loan.
8. A minimum of one full year (non-annualized) audited financial statements are required.
9. The project must have achieved Sustaining Occupancy for a period of three months immediately prior to the date that the application for Firm Commitment is submitted. Sustaining Occupancy is defined as having sufficient income to pay all operating expenses, monthly debt service, escrow and reserve for replacement requirements. Only leases with 12 month terms will be considered in the calculation. The certified rent roll level of occupancy for the most recent three-month period must be no less than 90% of the total units in the entire project, including all phases. Unusual rent concessions, other discounts and short term leases that are not typical in the market and that are offered by a landlord to induce a prospective tenant to enter into a lease must be taken into consideration when evaluating the credibility of the 90% occupancy requirement. The market analysis contained in the appraisal report must justify any processing occupancy rate that exceeds the certified rent roll occupancy level.
10. No waiver of the requirement for submission of “as-built” plans shall be permitted.
11. As per outstanding requirements, a current Phase I Environmental Assessment must be submitted. It should reference any prior Environmental Assessments and these older reports should be submitted if available.
12. In accordance with the Uniform Standards of Professional Appraisal Practice, the appraisal report should discuss any current listing of the subject and any offers made and/or accepted to purchase, lease or option the project. Also, since these projects are recently constructed or rehabilitated, depreciation will be minimal or significantly reduced, contributing to the reliability of the Cost Approach. Processing offices are reminded that this approach is required and should be considered in the reconciliation process.
13. Copies of any market studies and updates that were made in conjunction with obtaining the current loan must be submitted. The market analysis in the appraisal report will address current market conditions of the subject property.
14. Inspections/Repairs. All of the existing MAP Guide requirements related to project inspection, repair escrows, and protection against latent defects associated with the new Section 223(f) financing are applicable to cases processed under this waiver authority. In addition, the following requirements apply:
a. Any latent defects that became apparent during the warranty period provided under the project’s original construction contract, whether repaired or not, must be disclosed at the time of application.
b. The Project Capital Need Assessment shall assess the adequacy of the repairs performed to address any latent defects and determine whether any additional repairs are required to correct the defects, and shall establish a cost to complete the repairs.
c. All repairs required under this category, whether critical or non-critical, must be performed prior to closing and may not be included in the mortgage.
MORTGAGEE LETTER 2009-06
TO: All FHA-Approved Multifamily Mortgagees
SUBJECT: Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f)
Purpose
This mortgagee letter sets forth the Department’s policy to grant temporary authority to Multifamily Hub Directors to grant waivers of the Three Year Rule for Section 223(f) (MAP Guide, Section 3.8.a Eligible Property), for the purpose of providing liquidity to recently constructed, self sustaining properties that are unable to secure permanent long term financing due to the freeze in the capital markets. This mortgagee letter will benefit applications that meet all of the qualifications of the Section 223(f) program, except for the fact that the property was originally constructed or substantially rehabilitated less than three years prior to the date of application for Firm Commitment. Eligible applications will have a Certificate of Occupancy dated no later than July 31, 2008. The waiver authority granted under this Mortgagee Letter expires six months from publication. The Department will evaluate the effectiveness of this waiver authority based upon applications received and may elect to extend the program based upon that evaluation.
Background
A number of fully operating, self sustaining properties, which have recently been constructed or rehabilitated, are now unable to secure permanent long-term financing due to the freeze in the capital markets. At this time, the Department recognizes the need to provide liquidity to the market place. In order to do so, waiver authority of the Section 223(f) eligibility restriction to properties that have been completed or substantially rehabilitated for 3 years prior to the date of application is required. Historically, Section 223(f) program requirements have been temporarily modified to better meet program goals when economic conditions greatly decreased the availability of credit. When the Section 223(f) Handbook was originally published, it set forth a Special Eligibility Program that was applicable to recently completed projects, where construction was started before June 30, 1974 and completed before the end of 1975. This special program was implemented to address liquidity shortages prevailing in multifamily real estate financing at that time that prevented otherwise sound projects from obtaining permanent financing. The existing capital market credit freeze is similarly constraining the availability of permanent financing today. This Mortgagee Letter provides relief similar to that provided in 1974, but also includes additional requirements to ensure that the properties are viable, self sustaining and will not jeopardize the long term financial stability of the Section 223(f) program.
Waiver Authority
As of the date of this Mortgagee Letter, Hub Directors will have temporary authority to waive the Three-Year Rule for the Section 223(f) program for a six month period subject to the conditions and processing instructions below. The requirements of this Mortgagee Letter may not be waived by Hub Directors.
Conditions
1. This waiver authority applies only to the refinancing of conventionally funded projects that were originally constructed or substantially rehabilitated less than three years prior to the date of application for Firm Commitment and that have a Certificate of Occupancy for the entire project dated no later than July 31, 2008.
2. Projects that previously applied for mortgage insurance under other HUD programs and withdrew their applications are ineligible.
3. Any prepayment restriction associated with the new Section 223f financing must be discussed with the applicant.
4. The final mortgage amount shall only be sufficient to pay off existing indebtedness, as defined in Chapter 8.9.E of the MAP Guide and may not include an equity payment to the owner.
5. All other applicable program requirements for the Section 223(f) program must be met, including compliance with Chapter 10.8 of the MAP Guide that pertains to the nondiscrimination provisions of the Fair Housing Act, along with Executive Order 11063 and Appendix 5c, Paragraph E that concerns accessibility requirements for persons with disabilities.
6. The applicant must submit documentation evidencing that efforts to obtain permanent conventional financing have been unsuccessful, or that current offers of conventional financing have been canceled. This documentation should include rejection letters from prospective lenders or cancellation letters from lenders that had previously committed financing.
7. The applicant must submit evidence that all interest and/or debt service payments have been made on time since the beginning of the current loan.
8. A minimum of one full year (non-annualized) audited financial statements are required.
9. The project must have achieved Sustaining Occupancy for a period of three months immediately prior to the date that the application for Firm Commitment is submitted. Sustaining Occupancy is defined as having sufficient income to pay all operating expenses, monthly debt service, escrow and reserve for replacement requirements. Only leases with 12 month terms will be considered in the calculation. The certified rent roll level of occupancy for the most recent three-month period must be no less than 90% of the total units in the entire project, including all phases. Unusual rent concessions, other discounts and short term leases that are not typical in the market and that are offered by a landlord to induce a prospective tenant to enter into a lease must be taken into consideration when evaluating the credibility of the 90% occupancy requirement. The market analysis contained in the appraisal report must justify any processing occupancy rate that exceeds the certified rent roll occupancy level.
10. No waiver of the requirement for submission of “as-built” plans shall be permitted.
11. As per outstanding requirements, a current Phase I Environmental Assessment must be submitted. It should reference any prior Environmental Assessments and these older reports should be submitted if available.
12. In accordance with the Uniform Standards of Professional Appraisal Practice, the appraisal report should discuss any current listing of the subject and any offers made and/or accepted to purchase, lease or option the project. Also, since these projects are recently constructed or rehabilitated, depreciation will be minimal or significantly reduced, contributing to the reliability of the Cost Approach. Processing offices are reminded that this approach is required and should be considered in the reconciliation process.
13. Copies of any market studies and updates that were made in conjunction with obtaining the current loan must be submitted. The market analysis in the appraisal report will address current market conditions of the subject property.
14. Inspections/Repairs. All of the existing MAP Guide requirements related to project inspection, repair escrows, and protection against latent defects associated with the new Section 223(f) financing are applicable to cases processed under this waiver authority. In addition, the following requirements apply:
a. Any latent defects that became apparent during the warranty period provided under the project’s original construction contract, whether repaired or not, must be disclosed at the time of application.
b. The Project Capital Need Assessment shall assess the adequacy of the repairs performed to address any latent defects and determine whether any additional repairs are required to correct the defects, and shall establish a cost to complete the repairs.
c. All repairs required under this category, whether critical or non-critical, must be performed prior to closing and may not be included in the mortgage.
Sunday, February 8, 2009
Revised Guidance for Underwriting of LEAN 232 Loans for Assisted Living Projects:
Given the difficult economic and fiscal environment nationally, the Department is requesting that HUD approved Mortgagees exercise caution in underwriting loans under the LEAN Section 232 programs for new construction and refinance transactions for assisted living facilities. For all Assisted Living Project LEAN mortgage insurance applications under Section 223(f), Section 232 new construction and substantial rehabilitation, and Section 241(a), HUD will require justification/mitigation if the underwritten debt service coverage ratio (“DSCR”) is less than 1.45. Moreover, as was previously discussed with various lenders in June of 2008, for all LEAN mortgage insurance applications involving new construction of Assisted Living units, HUD will require justification/mitigation if the underwritten loan to value is greater than 75%.
The Department would consider, for example, a mitigating factor to be the inclusion of less expensive independent living units in the project or the presence of facility residents that are being provided with state or federal rental assistance subsidies. The Department’s review of mitigating factors will focus on any project specific attributes that result in limiting project market risk or in reducing project financial risk. The Department will be reasonable and flexible in determining where justifiable circumstances or mitigating factors exist.
Additional Guidance on the Use of Project Capitalization Rates:
The Department would like to provide general guidance regarding the usage of capitalization rates for Assisted Living projects. HUD believes that the capitalization rate should be a true reflection of conditions in the marketplace and the specific risks associated with a project. The Department is particularly concerned with the use (in some cases) of an approximate “risk free” capitalization rate for Assisted Living projects. The Department is not mandating a minimum capitalization rate. However, HUD may require justification/mitigation on Assisted Living projects if the capitalization rate used by the appraiser appears not to fully account for specific project and market related risks. This capitalization rate issue should be fully discussed in the Lender Narrative of the LEAN Application.
The Department believes that, in most but not all economic environments, the following debt service constant formula (Debt Service Constant + FHA MIP) multiplied by 1.25 would reflect reasonable guidance for the “minimum” capitalization rate for a proposed project.
Please note that the previous guidance on loan to value and debt service coverage on Section 232/223(f)’s for Skilled Nursing and Independent Living Facilities have not been revised.
The Department would consider, for example, a mitigating factor to be the inclusion of less expensive independent living units in the project or the presence of facility residents that are being provided with state or federal rental assistance subsidies. The Department’s review of mitigating factors will focus on any project specific attributes that result in limiting project market risk or in reducing project financial risk. The Department will be reasonable and flexible in determining where justifiable circumstances or mitigating factors exist.
Additional Guidance on the Use of Project Capitalization Rates:
The Department would like to provide general guidance regarding the usage of capitalization rates for Assisted Living projects. HUD believes that the capitalization rate should be a true reflection of conditions in the marketplace and the specific risks associated with a project. The Department is particularly concerned with the use (in some cases) of an approximate “risk free” capitalization rate for Assisted Living projects. The Department is not mandating a minimum capitalization rate. However, HUD may require justification/mitigation on Assisted Living projects if the capitalization rate used by the appraiser appears not to fully account for specific project and market related risks. This capitalization rate issue should be fully discussed in the Lender Narrative of the LEAN Application.
The Department believes that, in most but not all economic environments, the following debt service constant formula (Debt Service Constant + FHA MIP) multiplied by 1.25 would reflect reasonable guidance for the “minimum” capitalization rate for a proposed project.
Please note that the previous guidance on loan to value and debt service coverage on Section 232/223(f)’s for Skilled Nursing and Independent Living Facilities have not been revised.
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Commercial Mortgage - Apartment - Healthcare
