Freddie Mac Bond Credit Enhancement With Other Affordability Components
The Freddie Mac Bond Credit Enhancement With Other Affordability Components is intended for non-LIHTC affordable properties funded with tax-exempt bonds. It allows LTVs up to 90% for fixed-rate bonds and up to 85% for variable rate bonds, with DSCRs as low as 1.25x.
Freddie Mac Bond Credit Enhancement for Affordable Property Preservation
If you're an investor or developer interested in using tax-exempt bonds to acquire an non-LIHTC affordable property, or to substitute or refund bonds currently used to fund a non-LIHTC affordable property, Freddie Mac's Bond Credit Enhancement with Other Affordability Components could be the perfect fit.
This form of bond credit enhancement offers flexible terms between 10 and 30 years, with amortizations of up to 30 years, is non-recourse, and permits both subordinate financing and eligible mixed-use properties. Plus, Freddie Mac's Bond Credit Enhancement with Other Affordability Components is designed for both fixed and variable-rate bonds, and permits LTVs of up 90% of market value and DSCRs as low as 1.25x.
To learn more, check out Freddie Mac’s official Bond Credit Enhancement with Other Affordability Components Product Sheet or keep reading below for an in-depth explanation of the program.
Sample Freddie Mac Terms for Bond Credit Enhancement With Other Affordability Components in 2024
Size: Varies based on LTV and DSCR requirements.
Uses: Bond credit enhancement for "fixed- or variable-rate multifamily housing bonds including bond refunding, substitutions or new issue transactions with 80-20 bonds, taxable bonds in combination with tax-exempt bonds, 501(c)(3) bonds, Section 8, Section 236, or tax abatements."
Terms: 10 to 30 years
Amortization: Up to 30 years
Interest Rate: Fixed and floating-rate options available
Interest-Rate Caps: Required
Variable-rate with cap hedge: 80% of adjusted value or 85% of market value/1.25x
Fixed-rate: 85% of adjusted value or 90% of market value/1.25x
Subordinate financing permitted
Eligible mixed-use properties supported
Appraisal, Environmental and Engineering Reports required
Application fee, commitment fee, credit facility fee, outside counsel fees, and other fees required
Eligible Properties: Garden, mid-rise and high-rise multifamily properties with minimum occupancies of 90% for 90 days
Recourse: Non-recourse with standard “bad boy” carve-outs
Prepayment Penalty: Fee maintenance
Advantages:
Disadvantages: