section 221(d)(4)

MULTIFAMILY CONSTRUCTION AND PERMANENT FINANCING
NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION

The purpose of the program is to provide attractive long term financing for the construction or substantial rehabilitation of multifamily rental housing. The loan is both a construction and permanent loan. The program provides for competitive interest rates without restriction on rental rates, cash flow or income levels of residents.

BASIC FEATURES:

A. Personal Liability: Loans are non-recourse to the owner and secured solely by the property.

B. Amortization: 40-year schedule.

C. Term: 40-year term.

D. Loan Amount: The maximum insurable mortgage is the lesser of:

1. 90% of cost allowed by HUD, or

2. The amount of debt supported by 90% of the projected net operating income.

E. General Contractor’s Fee The program allows a general contractor’s fee or, in lieu of such fee, a Builder’s and Sponsor’s Profit and Risk Allowance (BSPRA). BSPRA is an amount equal to 10% of the development costs of the project excluding land. BSPRA is treated as a credit to reduce the equity requirements. It is therefore possible to realize funding in excess of 90% of the development cost.

F. Substantial Rehabilitation: The program allows for financing of apartments in need of rehabilitation if:

1. The cost of repairs, replacements and improvements exceeds the greater of:

a. 15% of the property’s value after completion of repairs, replacements and improvements

b. $6,500 per dwelling unit (adjusted by the applicable high cost factor), or

2. More than one major building component is being replaced; such as, roof, ceiling, walls, floor structures, foundation, plumbing, HVAC or electrical system.

G. Units: The property must contain five or more dwelling units with each unit providing a complete living facility.

H. Commercial Areas & Income: Commercial areas may not exceed 20% of the total net rentable area of the property nor may commercial income exceed 25% of the estimated gross project income.

I. Interest Rates: Fixed rate during construction and the permanent phase of the loan determined by market rates at the time of rate lock.

J. Assumability: Fully assumable.

K. Pre-Payment Provisions: Negotiable, but typically closed for five years then open to pre-payment at 5% of the outstanding loan balance in year 6, declining 1% per year.