Forward Commitment for New Construction or Substantial Rehabilitation of Market Rate Apartments


ELIGIBLE PROPERTIES:
New construction or substantial rehabilitation of apartments. Unit rents will be underwritten to be affordable such that either 51% of the units are affordable to households earning not more than 100% of area median income, or 100% of the units are affordable to households earning not more than 120% of area median income. This affordability test is for loan sizing purposes only. No restrictions will be placed on the actual rents charged.

LOAN TYPE:
Balloon mortgages with a 7, 10, 15 or 18-year term.

Also 20, 25 and 30-year fully amortizing structures.

Loan funds will be advanced to an approved Construction Lender in a lump sum or in installments. Requires credit support during the Forward Commitment Period in the form of a Letter of Credit from an “A” or better rated institution. Guaranteed Investment Contract option available.

PREFERRED LOAN SIZE:
$3 million and larger.

MAXIMUM LOAN:
Amount equal to the lesser of:

  1. 80% of appraised value; or
  2. An amount based on 1.25 debt service coverage.

INTEREST RATES:
Determined by market rates at the time of rate lock. Rates vary by loan-to-value ratio debt service coverage and property quality.

FORWARD COMMITMENT TERM:
Up to 24 months with one 6-month extension, longer forward commitment terms available.

AMORTIZATION:
Up to 30 years.

PERSONAL RECOURSE:
None, except for standard exceptions to non-recourse, which are the responsibility of the Key Principal(s).

ASSUMABILITY:
Assumable, subject to CWCapital approval and 1% transfer fee.

PREPAYMENT:
Yield maintenance or defeasance options.

SUBORDINATE FINANCING:
Fannie Mae Supplemental Loans (second mortgages) available 12 months after initial loan closing.

ESCROWS:
Monthly escrows for real estate taxes, property insurance and replacement reserves upon permanent loan closing.

APPLICATION FEE:
Based on estimated underwriting costs for appraisal, architectural / engineering report, environmental assessment and other loan processing costs.

FINANCING FEE:
Negotiable.

CLOSING EXPENSES:
Standard transaction costs, including legal fees, title insurance and survey.

FANNIE MAE FEES:
A forward commitment deposit equal to 2% of the commitment amount to be paid prior to rate lock. Deposit may be in cash or letter of credit and will be refunded / released upon delivery of the permanent loan.

FANNIE MAE DELIVERY ASSURANCE CERTIFICATE:
At construction loan closing, the Borrower must execute Delivery Assurance Certificate in favor of Fannie Mae, secured by a subordinate lien.

The lien will be released upon permanent loan closing.

PERMANENT LOAN CLOSING:
Project completion with Certificate of Occupancy for all units, 90% occupancy for 90 consecutive days.

PRELIMINARY SUBMISSION PACKAGE:
Include the following in your request for a loan quote:

  1. Property description and unit mix with proposed rent schedule.
  2. Location Map.
  3. Developer’s pro forma income and expenses.
  4. Anticipated sources and uses of funds schedule detailing
    development costs.
  5. Sponsor resume.

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This is a summary of general program terms, which are subject to change. This is not a commitment to lend.