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. 

Eligible Properties: 

  • 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. 

Advantages:

  • Up to 85% LTV allowance 
  • Eligible mixed-use properties supported
  • Loans are interest only 
  • Subordinate debt allowed under certain circumstances

Disadvantages:

  • 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)