Walker & Dunlop Facilitates $222M Refi Ahead of Rate Increases

The private borrower used the IRR program to obtain lower interest rates on 30 existing HUD loans backed by senior living and healthcare properties.

moneyBethesda, Md.—Walker & Dunlop Inc. has closed a $222 million portfolio through the HUD Interest Rate Reduction (IRR) program. The private borrower used the IRR program to obtain lower interest rates on 30 existing HUD loans backed by senior living and healthcare properties.

HUD created the IRR program in 2013 as an alternative to its other refinance options to allow existing HUD multifamily borrowers to more easily take advantage of historically low interest rates. Through the program, the mortgage interest rate is reduced without affecting the maturity date or other mortgage terms.

Michael Vaughn and Kevin Giusti, both senior vice presidents, led Walker & Dunlop on the transaction. “The collaboration of Walker & Dunlop and HUD enabled us to lock the interest rates before they jumped significantly,” Giusti said.

The move comes ahead of potential interest rate increases by the Federal Reserve, one likely this month and perhaps a few more this year, that will increase the cost of borrowing. On the whole, lending for multifamily has increased in recent quarters, partly in response to the prospect of more expensive borrowing.

According to the Mortgage Bankers Association, the fourth quarter of 2016 saw a 16 percent increase in mortgage originations for multifamily properties (including refi) compared with the previous quarter. Compared with a year earlier, the increase was 6 percent.