Freddie Mac multifamily launches two new mortgages.
The Freddie Mac Acquisition Upgrade Mortgage[sm] is designed to provide financing for cosmetic improvements, while the Freddie Mac Acquisition Rehabilitation Mortgage[sm] is available for more substantial improvements that allow borrowers to reposition properties in their respective markets.
These new products provide funds for both the purchase and upgrade or rehabilitation of the property in one first-lien mortgage, according to Mitchell Kiffe, vice president of multifamily sourcing for Freddie Mac.
"A lot of acquisition deals involve new owners/operators who want to renovate. Now, with one mortgage and one lender, a qualified borrower can obtain funds to both purchase and upgrade or rehabilitate an existing multifamily property, maximizing cash flow through upfront financing," said Kiffe. "These new products are part of our strategy to better meet borrower needs and be more competitive in the marketplace."
For the Acquisition Rehabilitation Mortgage, the total repair cost must be a minimum of $10,000 per unit, but must not exceed the lesser of $30,000 per unit or 30 percent of acquisition cost. With this product, the rehabilitation is expected to have a higher impact on new stabilized rents, enabling the borrower to fully reposition the property, perhaps for a different customer base, said Freddie Mac.
Borrowers will be able to finance a higher percentage of their total project costs, because the size of their loan is tied to a percentage of loan-to-purchase, which has an upper limit of 90 percent.
Items generally permitted in the scope of work under the Acquisition Rehabilitation Mortgage include upgrades to interior and/or exterior finishes to units and/or common areas; new kitchen and/or bathroom cabinets and/or fixtures; new boilers or significant parts replacement; new roofing; new brick pointing; and parking lot resurfacing.
Meanwhile, the Freddie Mac Acquisition Upgrade Mortgage is for cosmetic improvements or light rehabilitation, which could include deferred maintenance items.
The total repair cost must be a minimum of $3,000 per unit, but must not exceed the lesser of $10,000 per unit or 20 percent of acquisition cost. This product offers borrowers financing of up to 86 percent loan-to-purchase and 80 percent loan-to-cost.
An Acquisition Upgrade Mortgage is subject to the same requirements as the Acquisition Rehabilitation Mortgage, except that the work to be done is cosmetic in nature and is generally limited to upgrades to interior and/or exterior finishes to units and/or common areas and new kitchen and/or bathroom cabinets and/or fixtures, said Freddie Mac.
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|Title Annotation:||Commercial; Federal Home Loan Mortgage Corp.|
|Comment:||Freddie Mac multifamily launches two new mortgages.(Commercial)(Federal Home Loan Mortgage Corp.)|
|Date:||Dec 1, 2007|
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