Freddie Mac Insured Bridge Loans for LIHTC-Eligible Properties
Freddie Mac Bridge Financing for the Acquisition or Refinancing of Low-Income Housing Tax Credit-Eligible Properties
If you're considering acquiring or refinancing a property with expiring Low-Income Housing Tax Credits, Freddie Mac's Bridge to Resyndication loan program could be a great fit for your needs. Bridge to Resyndication loans provide effective short-term financing that helps properties position themselves for longer-term financing, which can facilitate the acquisition of new LIHTC credits. These loans offer generous financing terms, including an up to 85% allowance and a minimum DSCR of 1.15x. Plus, Freddie Mac Bridge to Resyndication loans are interest-only, support eligible mixed-use properties, and permit subordinate financing in certain circumstances.
Sample Freddie Mac Terms For Bridge to Resyndication Loans
Size: Varies based on LTV and DSCR requirements.
Use: Preservation of affordable housing. Provides short-term financing to help borrowers acquire or refinance Low-Income Housing Tax Credit (LIHTC) eligible properties.
Terms: 24-month loan with one 6-month extension (requires approval)
Interest Rate: Floating-rate, interest-only loan. Typically based on 1 month LIBOR.
Maximum LTV: 85%
Minimum DSCR: 1.15x
Eligible Borrowers: Developers with strong financial capacity who have successfully completed multiple resyndications using 4% LIHTCs and tax-exempt debt.
- LIHTC properties at or nearing the end of their compliance period with LIHTC rents
- Good construction, may require some repairs (but repairs will not be completed during loan period unless they are of a life-saving/emergency nature)
- Must demonstrate that a public agency has the ability to issue enough tax-exempt, Volume Cap Mortgage Revenue Bonds for the property, using a predictable process
- A loan agreement rider will include specific benchmarks, including future rehabilitation plans for the property, benchmark dates, bond inducement resolution, and a commitment from an LIHTC investor
Subordinate Debt: Must be fully amortizing. Hard subordinate debt requiring the repayment of principal is only allowed if issued by a public sector entity. For soft subordinate debt, payment cannot be more than 75% of available cash flow.
Cash Equity Requirement: 15% if property has been owned less than 3 years
Occupancy Requirement: Minimum occupancy determined by using the comparable fixed-rate to achieve a 1.0x DSCR.
- Up to 85% LTV allowance
- Eligible mixed-use properties supported
- Loans are interest only
- Subordinate debt allowed under certain circumstances
- Requires third-party reports including Phase I Environmental Assessment, Appraisal, and Physical Needs Assessment
- 2% potential breakage fee
- 2% exit fee (not charged if loan is refinance with another Freddie Mac loan product)
- Also typically requires 2% rate lock fee (refunded when Freddie Mac purchases loan, typically 30 days after closing)