Download Mortgage Loan Increases and Project Needs | Term Sheet

Mortgage Loan Increases for Repairs and Project Needs | Term Sheet & Underwriting Standards
Maximum Loan
Amount
Debt Service
Coverage
Maximum 90% of appraised value.
1.05~pro forma Net Operating Income
The coverage will exclude IRP from income (and gross debt service calculations), where
applicable.
Example: a proposed new mortgage increase note has $100 debt service that will be added to
an IRP Note with $200 gross debt service comprised of $130 IRP and $70 paid by project
operating rental income. The required coverage will thus be 1.05 of $170, or $179.
Loan Term &
Amortization
Self-amortizing up to 40 years.
Eligible Projects
Any MassHousing financed development in order to:
(1) protect the physical asset from potential damage or tax lien taking;
(2) correct physical deficiencies not otherwise correctible;
(3) support the workout of a seriously troubled development; and
(4) achieve operating efficiencies
Ownership
Requirements
The existing borrower and any new owner entity must be in good standing on all existing
MassHousing obligations.
Prepayment
Locked from prepayment for the lesser of 15 years after Loan Closing or the term of the
mortgage increase.
Recourse/NonRecourse
Non-Recourse
Use of Loan
Proceeds
Proceeds from the financing will be used for repairs or other project needs, including
replacement reserve funding, energy conservation measures, and costs that endanger the
physical and financial stability of the development.
Credit
Enhancement
The mortgage increase loan will be funded from MassHousing Working Capital and thus will be
backed by the Agency's GO rating.
Massachusetts Housing Finance Agency
One Beacon Street, Boston, MA 02108
TEL: 617.854.1000
TDD: 617.854.1025
FAX: 617.854.1091
www.masshousing.com
MassHousing | Mortgage Loan Increases for Repairs and Project Needs | Term Sheet & Underwriting Standards
Due Diligence
Environmental Review
Environmental reviews cover impacts on environmental resources, including such elements
as hazardous materials, radon and a variety of man-made hazards such as asbestos, lead
paint, noise from airports, railroads and roadways. Environmental reviews may be waived if
there are emergency or imminent health and safety issues that would be addressed by the
mortgage increase.
Replacement Reserves
Based on Physical Needs Assessment report commissioned, reviewed and approved by
MassHousing. The Physical Needs Assessment will identify the capital needs of the project
over a twenty-year period.
Repairs/lmprovement
Escrow
Required repairs identified in the Physical Needs Assessment and all proposed project
improvements will be escrowed with MassHousing. Upon satisfactory completion of the
work, any remaining funds will be added to the Replacement Reserve Escrow.
Real Estate Tax Escrow
Sponsor will continue to fund monthly escrows for real estate taxes as required by
MassHousing.
Affordability
Requirements
The loan will require that 20% of the total units be reserved for low-income households
earning less than or equal to 80% of AM1 throughout the term of the MassHousing loan.
Owner Distributions
Limited dividend restrictions pursuant to the existing MassHousing loan will generally
continue and may only be reestablished at Loan Closing for the mortgage increase in
accordance with MassHousing’s Limited Dividend Policy.
Rates & Fees
Loan Interest Rates
MassHousing competitively prices interest rates to deliver the best rate possible for our
Borrowers. Please contact David Keene for a current rate indication.
Mortgage
Application Fee
0.3% of requested loan amount. Minimum of $3,000.
Financing Fee
2% of mortgage loan amount.
MassHousing Loan
Servicing Fee
Waived if MassHousing is Section 8 Contract Administrator. Otherwise, the Loan Servicing
Fee is up to 50 basis points of the original principal balance of the Mortgage Increase loan
and is added to the loan constant.
Construction
Inspection Fee
0.5% of construction contract.
Credit Enhancement
Fee
None (absorbed into the interest rate).
For more information, contact David Keene, Chief Preservation Officer at 617.854.1124.
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