| FHA 223(F) Apartment Loans Nationally KENDALL REALTY ADVISORS LLC - Chicago, IL Apartment Refinance and Purchase |
HUD - 223(f) - Apartment Properties Commercial Mortgages
Refinance or Purchase
ELIGIBLE PROPERTIES: Apartments which are existing and occupied* and properties that need
moderate Rehab
Market Rate Apartments Class A, B, C, - *FHA finance is not limited to low income apartments
Targeted Affordable Housing LIHTC and Tax-Exempt Bond Credit Enhancement
LOAN TYPE: Permanent loan.
TYPICAL LOAN SIZE: $3,000,000 and up
MAXIMUM LOAN: The lesser of the following criteria:
1. 85% of HUD appraised value;
2. 1.20 debt service coverage NEW
3. Statutory unit mortgage limits.
Refinance Transaction:
1. The greater of: (a) the cost to refinance up to 85% or (b) 75% of value for cash out
Purchase Transaction:
1. 85% of the cost of acquisition.
Note: Slight changes are needed in mortgage criteria for non-profit ownership and affordable housing.
INTEREST RATES: Fixed rate determined by market rates at the time of rate lock.
AMORTIZATION: Up to 35-year, fully amortizing loan.
PERSONAL RECOURSE: Non-recourse.
ASSUMABILITY: Assumable, subject to approval.
SUBORDINATE FINANCING: Allowable, subject to HUD criteria.
PREPAYMENT: Negotiable.
REPAIRS: Repair program may not exceed the greater of 15% of the value after repairs, or $6,500 plus
applicable high cost percentage per unit.
No more than one major building system can be replaced.
WAGE REQUIREMENTS: Davis-Bacon prevailing wage laws do not apply.
ANNUAL MORTGAGE INSURANCE PREMIUM: 1.0% of the mortgage amount is payable at closing.
Thereafter, the MIP is escrowed monthly based on a rate established by HUD. The rate is fixed at loan
endorsement.
ESCROWS: Monthly escrows for property insurance, real estate taxes, reserves for replacement (as
determined by HUD) and mortgage insurance premiums.
An initial deposit to replacement reserve and 100% of repair costs (both as determined by HUD) are
escrowed from mortgage proceeds.
COMMERCIAL SPACE: Commercial area shall not exceed 20% of the total net rentable area of the project
and commercial income shall not exceed 20% of effective gross income.
ENVIRONMENTAL ISSUES: Special rules apply for properties which are located in Flood Hazard Zones as
designated by FEMA.
Lead-based paint and asbestos must be abated in accordance with HUD requirements.
APPLICATION FEE: A non-refundable fee of 0.3% of the requested mortgage amount is payable to HUD at
the time of application, plus estimated underwriting costs for market study, appraisal,
architectural/engineering report, cost analysis, environmental assessment and other loan processing
costs.
FINANCING AND PLACEMENT FEES: Negotiable.
CLOSING EXPENSES: Standard transaction costs, including legal fees, title insurance and survey.
OTHER HUD REQUIREMENTS: Cash escrows or letters of credit are required for the following:
1. 20% of repair costs as a completion guarantee.
2. 2.5% of repair costs as a latent defects guarantee, due at completion of repairs.
3. Fore casted operating deficits, (maximum of 18 months) to be released upon achievement of
break even operations for 90 days.
HUD PROCESSING TIME: One stage for HUD Multifamily Accelerated Processing (MAP) procedures:
1. Firm Commitment Stage: 60 days for review.
PRELIMINARY SUBMISSION PACKAGE: Include the following in your request for a loan quote:
* Narrative describing the Property
* Unit mix with unit size, number of bedrooms and bathrooms including current rents
* Proposed Repairs and costs estimate listing items
* Details and list by item of ancillary income and monthly revenue proforma
* Estimated Sources and Use of Funds Summary
* Purchase Price or Existing Debt
* Current Rent Roll - with at minimum, unit number, lease amount, term of lease,
lease start-end dates and a summary of any rent concessions
* Occupancy History at recent year end and six months since
* Year to Date and past three years Operating Statements
* Resume of Key Principals and Borrowing Entity
* Exterior and Interior Photos
Scott Kendall 847-903-7578 kendallrealty@gmail.com
Charles Kendall 773-259-7074 kendallrealtyadv@gmail.com
* Revised Three year rule waiver FHA 223(f) July 29, 2009 properties with a certificate of occupancy
can apply for waiver to three year rule if the current lender or conventional lenders turn down
refinancing.
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