Apartment Loan Rates are still near historical Record lows

FHA 223f loans at 4% to 4.25% FNMA spreads have risen sligntly

See: Apartment Lender Apartment Loan Pricing : http://bit.ly/k6rQzu

Apartment Lender Commercial Mortgage Rates May 9, 2011

Apartment Lender Apartment Loan Pricing http://goo.gl/ecuvQ FHA 223(f) FNMA Large and Small Loans Commercial Mortgage Rates FHA 223 F 4.25% FNMA DUS 10 years low 5%

Commercial Mortgage Chicago Apartment Loan Rates

Apartment Lender Commercial Mortgage Rates FHA FNMA and SMALL Apartment Loans

Updated Apartment Loans Rate Chart

Chicago Commercial Mortgage Apartment Rates April 1, 2011

Agency Multifamily Loan Rates 10 yr 5.80% - 7 yr 5.50%
Small Apartment Loan Chicago 5.95
FHA 223 (f) 5% $3 M and up 35 yrs

Banks 5-6% 5 years

Commercial Mortgage Apartment Chicago Nationally Rates

FNMA Small Apartment Loans Chicago Apartment Purchase Refinance: http://bit.ly/cd5Xae 5.90% 10 yrs

Small loans $750,000 - $3,000,000 - 5.90% 10 yrs.

Apartment Loan Rates Agency 10 yr. 5.75% - 7 yr 5.40% FHA 223(f) 5% including MIP 35 yrs.

Refinancing of LIHTC apartments - Market Rate Apartments FHA 221(d)4 new construction for apartments.

FHA 232 LEAN financing takes over 6 months for refinances but rates are great.

New construction Assisted Living takes about a year under FHA 232 LEAN new construction.

We are working conventionally on deals

Bank Loans Apartment Commercial Mortgage

Apartment Loans

We have several bank lending programs available for Chicago, WI, MN and IN. rates start in the low 5% for 5 years.

FNMA DUS rates back up to about 5.85% for ten years The small apartment loan runs about 6.10% for ten years.

FHA 223(f) holding steady near 5% 35 years $3 million min.

Healthcare Assisted Living Nursing Home

FHA 232 223(f) just over 5% for 35 years.

FHA 242 Hospital Refinance 5.85% 25 years

Multifamily Fundamentals Best of Commercial Real Estate Property Types

Multifamily Fundamentals Better than Other Property Types | Multi-Housing News Online

Multifamily fundamentals in particular have improved, though not quite back to where they were during the more flush days of the mid-2000s. During 3Q10, average apartment vacancies nationwide were 7.7 percent, compared with 5.8 percent during 3Q07. Yet among property types, apartments are the healthiest in terms of 3Q10 vacancies:

Apartment Loans Click Here

Loan Rates Rising Treasury in SELL OFF

Apartment Loan rates have risen in the last month with rising US treasury rates.  For apartment loan programs  http://bit.ly/Wrs4l Scott (847) 903-7578


Ten and thirty year treasuries are in a sell off losing over one point today with rates rising about 15 basis points
The ten year treasury is now at 3.46% from 3.33% earlier today and near 2% a few months ago.

FHA 223 F rates have risen the least since they are wrapped with GNMA insurance and are rated AAA. FHA 223 F loan can still be locked below 5% for a 35 year loan.

FNMA and Freddie Mac rates have risen more since there is uncertainty of their future credit rating when the government stops backing them up.  Currently large apartment loan rates are about 5.45% for Seven Years and about 5.90% for ten year loans.

FNMA small apartment loans are now running over 6% for ten years.

Several clients have reported bank quotes  of 50% to 60% loan to value and twenty year amortizations, offered by several large Midwestern regional banks.

FNMA Small Apartment Loans Chicago Closed Kendall Apartment Loan

Kendall Realty Advisors LLC closes FNMA small apartment loan Evanston, IL
Loan amount $750,000 plus, term 10 years, rate under 5.60% Non-Recourse
Only $4,500 application fee includes appraisal, engineering and legal for deals exceeding $750,000.
Closings within two to three months of loan application sizing.
Rates set two weeks prior to closing

HUDUW2010 - FHA Apartment Underwriting Changes Proposed

FHA Apartment Loan Underwriting Changes FHA 223(f) and FHA 221(d)(4)

Summary of CREF Conference 2/5/2010

www.kendallrealtyadvisors.com

FHA PROPOSED UNDERWRITING CHANGES FOR MULTIFAMILY

February 5, 2010

Carol Galante, Deputy Assistant Secretary for Multifamily Housing, spoke to members at the CREF convention earlier this week, outlining changes HUD is proposing to strengthen the FHA multifamily programs.  While she pointed out that the HUD staff (both in Headquarters and in the field) had thought a lot about these proposals, they were open to hearing concerns and alternative ways to reach the same objectives. 

As background for why the changes are needed, she pointed out that market rate Section 221(d)(4) loans are showing the greatest signs of performance deterioration with monthly default rates escalating.  She also noted that FHA has a concentration of market rate properties in the highest vacancy markets.  She informed the group that claims rates for apartments have increased from .6% in FY2007 to 1.2% in FY2009.  And they have talked to the Hub Directors who have reviewed their portfolios and expect claim/partial payment of claim rates in FY2010 of 2.4%.

The policy response to increasing defaults and claims will be in three areas: 1) Improved counterparty oversight (of both MAP lenders and borrowers); 2) Improved credit risk management; and 3) Improved processing.  Before detailing the proposed changes, Ms. Galante pointed out that many things were considered but left unchanged, including:

o              All programs will be continued; there will be no temporary suspension of any programs.

o              There will be no LTV requirement for Section 221(d)(4) loans.

o              The programs will continue as non-recourse.

o              FHA will still provide the most generous underwriting criteria of any execution.

o              No MIP increase in proposed.

Improved counterparty oversight

1      Net worth requirements will be increased for multifamily mortgagees.  While final decisions have not been made, a final rule is expected to be published in March.  That rule will have separate requirements for single family and multifamily mortgagees, will provide for a phase-in of the higher requirements, and will allow for waivers for existing lenders with good performance.

2      For MAP lenders, there will be a new specialty certification for those lenders (and underwriters) desiring to originate new construction or low income housing tax credit deals.  The details have not yet been worked out, but the lenders/ underwriters will need to demonstrate experience/expertise in these areas. 

3      Multifamily will be instituting a credit watch system similar to single family with more objective criteria for oversight of lenders.  A point system is being considered with points imposed for number of application warning letters, defaults, claims, etc.  Enforcement steps will be taken based upon a lender’s FY2010 book of business.

4      The new mortgage documents will require disclosure of trade profits similar to what is required of mortgage brokers on single family loans under RESPA.

5      Borrower reviews will be tightened with 1) a full analysis of the sponsor’s and key principle’s REO schedule; 2) contingent liability for a key principle who must sign and take responsibility for “bad boy” acts of the mortgagor entity; and 3) additional HUD review for any key principle portfolio concentration of over $250 million.

Improved Credit Risk Management

1      Debt Service Coverage

o              221(d)(4) with 95% rental assistance—remain at 1.11

o              221(d)(4) with LIHTC – increase from 1.11 to 1.15

o              221(d)(4) Market – increase from 1.11 to 1.20

o              221(d)(3) -- increase from 1.05 to 1.11

o              223(f) Market – increase from 1.176 to 1.20

o              223(f) with LIHTC or rental assistance – unchanged at 1.1765

2      Additional Requirements

o              221(d)(4)s

Maximum LTC remains 90% for projects with rental assistance, but is reduced to 87% for projects with LIHTCs      and  to 83.5% for market rate properties

Minimum IOD of 4 months’ debt service (principal, interest and MIP)

Construction contingency increased from 5-10% to 10-15%(SR only)

Working Capital Escrow increased from 2% at 4% to cover new construction cost overruns and change orders

No release of cash out proceeds until construction complete and sustaining occupancy achieved

Must be able to demonstrate ability to stabilize within 18 months of completion, unless waived for larger projects

Maximum underwriting occupancy is 93% (decreased from 95%) unless waived

o              223(f) Refinances

Sustaining occupancy will be defined as 90% physical occupancy and  85% economic occupancy for 6 months prior to application; maximum underwriting occupancy is 93%

 Audited financials for previous year must be provided for properties of 50+ units, but can be waived for acquisition financings only

§              Clear all accounts payable, project liability and deferred management fees at closing

§              Maximum 75% LTV if cash out; release of cash out deferred until repairs are completed

§              Failed condos where  some condos were  sold  may not be eligible for HUD financing

Processing Improvements

1      Expedited processing for applications that help FHA meet its housing goals (more clarity will be provided on this once HUD’s strategic plan is published) and those applications which are easier to process (no definition of this yet)

2      Greater scrutiny of new applications in submarkets where there is existing concentration of insured portfolio or with recently completed 221(d)(4)s in stabilization

3      For areas with high vacancy rates and high concentrations of HUD insured mortgages,  field office has to review how other HUD insured transactions in area are performing as part of pre-app review process

4      All applications eligible to be submitted under MAP must be submitted under MAP, not TAP

5      Mortgagees will be encouraged to sit down early with the field offices to prescreen applications before they are submitted

6      Underwriting narrative will be standardized (similar to LEAN)

7      Mortgagee and borrower certifications will be combined (similar to LEAN)

8      Applications and third party reports must be submitted in hard copy as well as via disc or flash drive

9      Section 223(a)(7)s may be allowed to be processed under MAP, and OAHP may have a role in the processing where preservation is involved

10 Under TAP, the borrower will be given the option of paying for third-party reports to expedite the processing

Implementation

1      Current thinking is that program criteria in effect at time application is submitted will dictate.

2      Not clear yet what “application submitted” means for 221(d)(4)s; could be pre-app submitted, HUD invitation issued,  or firm commitment application package submitted. No decision has been made yet but HUD is willing to listen to recommendations.

3      Will be implemented through Mortgagee Letter which will probably take at least 90 days to issue (May 2^nd +/-).

Ms. Galante stressed that they were open to feedback on all of these changes but she also noted that they had thoroughly discussed this proposal and this is the direction they want to go.  When asked about tightening market-by-market rather than nationwide, she responded that they preferred to go in the direction of tightening everywhere and then providing waivers in strong markets. She also stressed that these changes do not have to last forever, but when the market strengthens, they can change many of these underwriting criteria again. 

Commercial Mortgage Update and FHA proposed Changes

Commercial Mortgage Update - We have strong bank making bank loans for strong borrowers.  They also offer   short term apartment and other commercial loans under 5% for three and five years.

FNMA Small Apartment Loans are running about 6% for a point free deal.

FHA proposes changes to FHA 223(f) and 221(d)(4) apartment loans.  1.20 DSC for both programs for market rate deals and increased working capital (4%) and operating deficit for new construction deals. These rules are proposed and are not in effect at this time.  FHA 242/223(F) has revised the rules for refinancing and if these rules are adopted more transactions will be able to refinance existing debt.

FHA Apartment Loan Proposed Underwriting Changes

FHA Bombshell: We're Tightening Our Underwriting - Debt, Lenders, Government Entities - Multifamily Executive Magazine:

"FHA wants to raise the debt service coverage ratio (DSCR) for the popular Sec. 221(d)(4) program"

"under the proposed changes, market-rate deals seeking 221(d)(4) loans would be underwritten to a minimum 1.20x DSCR. Projects with subsidy levels of 95 percent or greater will still enjoy a 1.11x DSCR, but low-income tax credit deals would be bumped up to a minimum 1.15x."

For FHA 223(f): "Tax-credit deals and HAP-contract deals will stay at the program’s current level of 1.1765x DSCR, but market-rate deals will be bumped up to 1.20x."

"The changes will be open for public comment once they are published on the Federal Register. And judging by the initial reaction of FHA lenders, there will be quite a debate between industry lobbying groups and the agency. The Mortgage Bankers Association is still studying the impact of the changes and gathering additional information on the rationale behind them, before it takes an official position."

For the complete article click here:  http://bit.ly/bvqoUV

Commercial Mortgage Lender Apartment - Healthcare - Hospitals

Commercial Mortgage Activity picked up as the month ended after a slow start.

We are seeing more Small Apartment Loans , a few FNMA DUS and Freddie Mac loans and several FHA 221(d)(4) loans for apartment new construction loan requests.

FHA 232 Lean activity is still strong, but many deals will not be funded at this point due to the soft market memo issued by FHA for IL, MI, OH, AR, CA and FL.

Hospital loan activity has increased with the new FHA 242/223(f) program and the Build America Bond program for FHA 242 New Hospital Construction for Municipal borrowers.

FHA 223(f) and FHA 232/223(f) rates are under 5% plus MIP. Add over one percent for new construction deals such as FHA 221(d)(4), FHA 232 LEAN and FHA 242.

Chicago Commercial Mortages Apartments Senior Housing Healthcare Hosptials

Kendall Realty Advisors provides fixed rate commercial mortgages for Apartments using FHA 223(f), Fannie Mae DUS and Freddie Mac, We offer the FNMA small apartment loan for the Chicago Area.

We also provide FHA 232 LEAN and FHA 242 Hospital Loans.

For more information Contact Scott Kendall at (847) 903-7578 or kendallrealty@gmail.com

For program details go to www.kendallrealtyadvisors.com