(1888PressRelease)
April 04, 2008 - As a full service mortgage banking firm, Bedford Lending works as your financial adviser and as your lender. We carefully guide our clients through the finance maze, spending many hours evaluating the pros and cons of each alternative so that our clients can make fully informed financial decisions. Bedfordlending has recently launched FHA SECTION 202 PROGRAM to refinance.
Description -
HUD's Section 202 program provides capital advances to finance the construction, rehabilitation, or acquisition with or without rehabilitation of structures that will serve as supportive housing for very low-income elderly persons and provide rent subsidies for the projects to help make them affordable. HUD revamped FHA's Section 223(f) refinance program and Section 221(d)(4) substantial rehabilitation programs to facilitate recapitalizing these properties.
Eligibility -
# Existing Section 202 loan and nonprofit owner in good standing with HUD.
# For-profit entity can partner with a nonprofit as part of the new loan.
# Tenant Notification: Must notify intention to prepay at least 30 days before submitting prepayment request to HUD.
# Need HUD pre-approval (or in some cases just notification) to prepay
Loan Structure -
* 6% of Owner's Equity distribution permitted
* 15% developer's fee allowed, with or without Low-Income Housing Tax Credits (LIHTC)
* Capitalization rates derived using band of investment and any favorable financing
o Real estate tax abatements and below-market "PILTOTS" may be recognized in the valuation
* Mortgagor equity takeouts not permitted, but limited seller equity takeouts are permitted if property is being sold.
* Self-supporting services and meals can be continued.
* Processing Time Period: 5-8 months refinance; 8-12 months substantial rehabilitation.
Requirement and Fees -
* Application fees :
o 0.3% for a Firm commitment to insure mortgage (FHA exam fee refundable at closing)
o 3rd party report costs
* Paid at closing :
o 0.9% for the 1st year's mortgage insurance premium (MIP) for a 221(d)(4); 1.09% MIP for refinancing loans
Refinancing Terms -
* Term: Market competitive interest rates with amortization period up to 35 or 40 years (or shorter if desired).
* For both 223(f) and 221(d)(4):
o Debt service coverage ratio (DSCR): 1.10x
o Loan-to-value (LTV): 90%
o 221(d)(4) has more aggressive criteria if needed
Advantages / Highlights -
* Projects can be repositioned and repaired for long-term preservation.
* Units with project-based Section 8 contracts may be underwritten at contract rates rather than market rents; Ancillary income can be recognized as well.
* Aggressive CAP rates and loan sizing criteria can be used.
* Developer fees are allowed
* Tax abatements may be recognized
For More Details on Requirement & Fees/Refinancing Terms/Advantages/ Highlights visit site - http://www.bedfordlending.com
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