FREDDIE MAC OPTIGO®
Conventional Small
FAST, FLEXIBLE, FIXED-RATE FINANCING FOR SMALLER LOANS
Through the Freddie Mac Optigo Conventional Small fixed-rate loans, you get a flexible financing solution and certainty of execution for the acquisition or refinance of multifamily housing properties with loans of $10 million or less. Borrowers have a variety of options to suit their individual needs.
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ELIGIBLE BORROWERS
- Borrower may be a limited partnership, corporation, limited liability company or a tenancy in common (TIC) with 5 or fewer tenants in common
- General partnerships, limited liability partnerships, real estate investment trusts (REITs) and certain trusts may also be acceptable in limited circumstances, subject to additional
requirements - Borrower must be a Single Purpose Entity (see the Single Purpose Entity Borrower Rider to Loan Agreement (Loans $20,000,000 and Under) for basic SPE requirements).
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ELIGIBLE PROPERTIES
Standard multifamily housing, with exclusions for student properties, seniors housing, manufactured housing communities, and cooperative housing. Loans may be used for acquisition or refinance. Hard subordinate debt is not permitted.
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INELIGIBLE CHARACTERISTICS¹
Fractured condos, vertical condos, Delaware Statutory Trusts (DSTs), ground leases, scattered site,home-sharing, co-living, micro-units (limited to 5%), septic and well water/non-public utilities
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TERMS
5, 7, 10, 12 or 15-year terms.
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AMOUNT
Generally, $2 million to $10 million
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MAXIMUM AMORTIZATION
30 years
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AMORTIZATION CALCULATIONS
Actual/360 standard; 30/360 available
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LOCK-OUT PERIOD
2 years following securitization
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PREPAYMENT PROVISIONS
Standard prepayment provision is yield maintenance until securitized followed by 2-year lock-out; defeasance thereafter. No prepayment premium for final 90 days. If loan is not securitized within first year, then yield maintenance applies until the final 90 days. Step-down and yield maintenance without defeasance are available at an additional cost.
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TAX & INSURANCE ESCROW
Generally required
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REPLACEMENT RESERVE DEPOSIT
Generally required
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RECOURSE REQUIREMENTS
Non-recourse except for standard carve-out provisions
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LOAN DOCUMENTS
Standard loan documents required, without modifications
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SUPPLEMENTAL LOAN AVAILABILITY
Yes, subject to requirements specified in the Loan Agreement
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APPLICATION FEE
0.10% of loan amount.
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LOCK OPTIONS
Spread lock for 60 days post-loan application. Index Lock option may be available for sponsors and properties that qualify. Optigo lenders should consult with their regional Freddie Mac representative to determine eligibility
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REFINANCE TEST
No Refinance Test is necessary if the loan has an amortizing debt coverage ratio (DCR) of 1.40x or greater and a loan-to-value (LTV) ratio of 60% or less
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GUARANTOR REQUIREMENTS
- Minimum Liquidity: Greater of 100% of the ADS, or 10% of the total loan amount
- Minimum Required Net Worth: $5M. Net Worth requirement will be higher for loans $5M – $10M.
- FICO score of 680 or better, for individual Guarantors or for at least one of the Guarantors when there are multiple Guarantors, applies to all <= $10 MM loans
LTV RATIOS & AMORTIZING2 DCR
PAYMENT TYPE (FOR SPECIFIC PRODUCT ADJUSTMENTS, REFER TO INDIVIDUAL TERM SHEETS)
Amortizing and Partial Interest Only4
| Conventional Small Maximum LTV & Minimum DCR3 | Minimum Amortizing DCR | Maximum LTV4 |
| 5-Year and < 7-Year Term | 1.25x | 75% |
| 7-Year Term | 1.25x | 80% |
| >7-Year Term | 1.25x | 80% |
Full-Term Interest-Only
| Conventional Small Maximum LTV & Minimum DCR3 | Minimum Amortizing DCR | Maximum LTV5 |
| 5-Year and < 7-Year Term | 1.25x | 65% |
| 7-Year Term | 1.25x | 65% |
| >7-Year Term | 1.25x | 70% |
1Freddie Mac, in its sole discretion, sets credit parameters for any transaction based on its underwriting criteria at the time of such request. Freddie Mac may decline to issue a quote for any transaction that it deems to include features or characteristics that are non-standard or otherwise deviate from Freddie Mac policy for other loans of this type originated by Freddie Mac.
2The DCR calculated for the partial-term interest-only and full-term interest-only period uses an amortizing payment.
3Adjustments may be made depending on the property, product and/or market.
4For partial-term interest-only loans, there must be a minimum amortization period of 2 years. All mortgages with <2 years of amortization must meet the requirement for full-term Interest Only Mortgages.
5Maximum combined maturity LTV is 70% subject to adjustment for certain property and loan types
