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FREDDIE MAC OPTIGO®
Bond Credit Enhancement with 4% LIHTC
FUNDS PROVIDED BY TAX-EXEMPT BOND PROCEEDS
| Forward Commitment | Immediate Funding | Preservation Rehabilitation | |
| ELIGIBLE PROPERTY TYPES | To-be-built or substantially rehabilitated garden, midrise, or high-rise multifamily properties with 4% LIHTC. | Garden, mid-rise, or high-rise multifamily properties with 4% LIHTC that maintain 90% occupancy for 90 days. | Garden, mid-rise, or high-rise multifamily properties with 4% LIHTC undergoing moderate rehabilitation with tenants in place. |
| TERMS | Minimum term: Remaining LIHTC compliance period or 15 years, whichever is less. Maximum term: 35 years. | Minimum term: Remaining LIHTC compliance period or 15 years, whichever is less. Maximum term: 35 years. | Minimum term: Remaining LIHTC compliance period or 15 years, whichever is less. Maximum term: 35 years. Rehabilitation/stabilization period (at a maximum of 24 months) will be included in loan term. |
| PRODUCT DESCRIPTION | Bond credit enhancement for new construction or substantial rehabilitation of affordable multifamily properties with 4% LIHTC. | Bond credit enhancement for the acquisition or refinance of stabilized affordable multifamily properties with 4% LIHTC with at least 7 years remaining in the LIHTC compliance period. | Bond credit enhancement provided for the moderate rehabilitation of affordable multifamily properties with new 4% LIHTC and tenants in place. |
| TYPE OF FUNDING | Bond credit enhancement available during construction phase (funded forward); letter of credit collateral required during construction phase; bond credit enhancement during permanent phase following successful conversion. Forward commitment to provide bond credit enhancement upon successful conversion from construction phase to permanent phase (unfunded forward). | Bond credit enhancement for fixed-or variable-rate taxexempt bonds. | Bond credit enhancement for acquisition/rehabilitation based on projected post-rehab net operating income (NOI); cash or letter of credit collateral required to fund gap between supportable debt on current NOI and bond mortgage loan amount (collateral held until stabilization); interest only available during the rehabilitation/stabilization period. |
| MINIMUM DEBT COVERAGE RATIO1 (DCR) | • Variable-rate with cap hedge: 1.20x. • Fixed-rate: 1.15x. | • Variable-rate with cap hedge: 1.20x. • Fixed-rate: 1.15x. | • Variable-rate with cap hedge: 1.20x. • Fixed-rate: 1.15x. |
| MAXIMUM LOAN TO-VALUE (LTV)2 | • Variable-rate with cap hedge: 80% of adjusted value or 85% of market value. • Fixed-rate: 85% of adjusted value or 90% of market value. | • Variable-rate with cap hedge: 80% of adjusted value or 85% of market value. • Fixed-rate: 85% of adjusted value or 90% of market value. | • Variable-rate with cap hedge: 80% of adjusted value or 85% of market value. • Fixed-rate: 85% of adjusted value or 90% of market value. |
| MAXIMUM FORWARD COMMITMENT TERM | 36 months plus a free 6-month extension during construction period. | N/A. | N/A. |
| MAXIMUM AMORTIZATION | 40 years. | 40 years. | 40 years. |
| PREPAYMENT PROVISIONS | Fee maintenance. | Fee maintenance. | Fee maintenance. |
| SUBORDINATE FINANCING | Permitted. | Permitted. | Permitted. |
| TAX AND INSURANCE ESCROWS | Required. | Required. | Required. |
| FEES | Application fee, commitment fee, credit facility fee, plus other fees as applicable. | Application fee, commitment fee, credit facility fee, plus other fees as applicable. | Application fee, commitment fee, credit facility fee, plus other fees as applicable. |
1May include bond refunding, substitution, or new issue transactions with 80-20 bonds, taxable bonds in combination with tax-exempt bonds, 501(c)(3) bonds, Section 8, Section 236, tax abatements and LIHTC.
2Adjustments may be made depending on the property, product and/or market.
