Sims Mortgage Funding has provided a $26.1 million loan for a proposed community, Elan at Terra Bella, located in Covington, La., in the North Shore area of the New Orleans metro. Vintage Realty Co. obtained development rights to the 178-unit property and opted for HUD-insured construction and permanent financing.
Risk mitigation plans for the payment and performance bonds were required due to a recent change in policy that no longer permitted dual insurers. HUD, SMF and Vintage closed the transaction before the deadline on the financing commitment expired. Bond risk mitigation was structured to be partially released at specific milestones during construction. Elan at Terra Bella is designed to meet green building standards, thus benefiting from a much lower than average mortgage insurance premium of .25 percent.
SMF obtained the HUD-insured loan under the Section 221(d)(4) program and underwrote it at 85 percent loan-to-cost ratio.
