First Affordable Housing Loan Closed Under New Freddie Mac Program
- Sep 05, 2014
Washington, D.C.—Freddie Mac’s new Direct Purchase of Tax-Exempt Loans initiative, the goal of which is to keep rental housing affordable for lower-income families and lower costs involved with financing for tax exempt multifamily properties, has closed its first loan. Walker & Dunlop Inc. originated a $14.28 million loan for The Lakewoods, an affordable seniors housing property in Dayton, Ohio, for Millennia Housing Development Ltd.
Under the program, Freddie Mac Multifamily purchases from its Targeted Affordable Housing (TAH) lender network multifamily tax-exempt loans, and aggregates and securitizes them into a new series called M-Deals. The tax-exempt loans are those issued by a city, county or state housing finance entity for apartments that have affordable rents. This new execution provides another option for TAH Seller/Servicers and borrowers that’s designed to cost less than other publicly offered credit-enhanced bonds.
According to Kimball Griffith, Freddie Mac Multifamily vice president of affordable sales and investment, the new execution can lower a borrower’s issuance costs and ongoing cost of capital significantly, as well as simplify the closing process. “It’s an alternative financing solution to our bond credit enhancement execution, and is particularly attractive for 4 percent Low-Income Housing Tax Credit developments,” he says.
The Lakewoods is a 417-unit apartment community that offers such as amenities as a crafts space, library, fitness center, beauty shop, billiards room and outdoor terraces on each floor. About 95 percent of the units will receive subsidies under a HUD Senior Preservation Rental Assistance Contract, and the property is Low-Income Housing Tax Credits restricted.
Walker & Dunlop, led by Atlanta-based senior vice president Frank Baldasare, originated and structured the acquisition rehab loan with a 16-year fixed-rate and 35-year amortization, working closely with Freddie Mac on this first execution. The GSE’s Direct Purchase of Tax-Exempt Loans initiative was introduced after The Lakewoods had been initially underwritten, but Walker & Dunlop says it decided to pursue the new execution as beneficial for the deal.