FANNIE MAE DUS®
Reduced Occupancy Affordable Rehab (ROAR) Execution
BENEFITS
- Flexible permanent loan solution that allows the sponsor to rehabilitate more efficiently.
- Eliminates need for a construction loan or forward commitment.
- Increased leverage opportunities when underwritten to as-improved rents.
- Interest only during rehab period.
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ELIGIBILITY
- Existing, stabilized Multifamily Affordable Housing properties undergoing renovations.
- Borrowers and Lenders with demonstrated experience.
- Available for both acquisition and refinance.
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TERM
5 – 30 years.
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AMORTIZATION
Up to 35 years.
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INTEREST RATE
- Fixed- and variable-rate options.
- Variable-rate only available for a Credit Enhancement Mortgage Loan for a bond transaction.
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MAXIMUM LTV
Up to 90% “as stabilized”.
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MINIMUM DSCR
1.15x – 1.20x “as stabilized”.
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EXECUTION
Credit Enhancement Mortgage Loan for a bond transaction. Interest only available, structured to match the rehab period. Cash execution not available at this time.
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LOAN SIZE
$5,000,000 minimum; no maximum.
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ELIGIBLE PROPERTIES
Stabilized Multifamily Affordable Housing properties undergoing renovations up to $120,000 per unit.
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ELIGIBLE BORROWERS
Strong borrowers with demonstrated tenant-in place rehab track record.
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RATE LOCK
30- to 180-day commitments.
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PREPAYMENT AVAILABILITY
Flexible prepayment options available, including yield maintenance and declining prepayment premium.
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REHAB PERIOD
12 – 15 months.
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REHAB PERIOD OCCUPANCY
During the rehabilitation period occupancy may drop from stabilized levels to a minimum of 50%.
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REHAB PERIOD – DSCR
During the rehabilitation period, DSCR may drop from stabilized levels to a minimum of:
- 1.0x (Interest-only basis).
- 0.75x (Amortizing basis).
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REHAB ESCROW
Rehab funds escrowed by Lender.
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RE-STABILIZATION
Fully stabilized no later than 15 months after Mortgage Loan origination.
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FANNIE MAE UW FEE
3 bps.
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RECOURSE
Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy. Construction Completion and Operating Deficit Guarantees required during the rehab and stabilization period.
