Apartments - Refinance / Acquisition
HUD Section 223(f) Mortgage Insurance Programs

(http://www.rockportmortgage.com:80//print/termsheets/apartments/223f.php)

Purpose
Provides mortgage insurance for existing apartment projects to facilitate either the refinancing or purchase of projects at least three years old. Available for profit motivated or non-profit borrowers.
Eligible Borrowers
Profit motivated, non-profit motivated and public owners are eligible
Maximum Term
35 years, not to exceed 75% of remaining economic life
Maximum Loan Refinancing
the lesser of:
1. The amount that can be supported by 85% of net operating income;
2. 100% of the cost of refinancing, not to exceed 85% of value; or
3. 80% of value in the case of an equity takeout.
Acquisition
the lesser of:
1. 85% of acquisition cost (i.e., total cost to close);
2. 85% of value; or
3. the amount that can be supported by 85% of stabilized net operating income. (Potentially, a surplus cash note for 7.5% of the acquisition cost can be utilized, thereby increasing the amount financed to 92.5%)
Personal Liability
None
Mortgage Insurance Premium
1.00% for the first year (payable at closing) and thereafter 0.45% of the outstanding loan amount.
Secondary Financing
Surplus cash notes are permitted, up to 7.5% of the project’s value or unlimited if public financing.
Repairs/Replacements
Funds for repairs, deferred maintenance and capital improvements for up to 15% of value or approximately $15,000/unit can be included in the loan amount, subject to the 85% loan to value limitations.
Funding
Qualifies for government insured mortgage-backed securities or direct placement or may be used to credit-enhance tax-exempt bonds.
Prepayment
Typically closed for two years then open to prepayment at 8% in year three, declining 1% per year.
Interest Rate
Subject to market conditions.
Financing Fee
Negotiable