FREDDIE MAC® Small Balance Loan (SBL) Coop Program

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Financing for the refinance of small balance loans (SBLs) cooperatives (co-ops), providing liquidity, stability, and certainty of execution to the affordable rental housing market nationwide.

Loan Amount $1,000,000 to $5,000,000 million
Loan Terms 10 years
Amortization Up to 30 Years
Interest Only 3 years at no cost, full-term IO may be available.
Minimum DSCR 1.70x as rental; 1.05x as cooperative
Maximum LTV 50% for market rate rental. 40% for cooperative.
Rate Structure 10 years fixed-rate
Eligible Property Types Multifamily housing with seven residential units or more
Ineligible Property Types Timeshares, resorts, hotels, rental pools and student housing co-ops, seniors housing, student housing, and military housing.
Eligible Borrower Single-asset cooperative corporations only
Occupancy Including both investor and sold units, 85% physical occupancy and 80% economic for 90 days prior to commitment date.
Market The five boroughs of New York City and Long Island
Tax and Insurance Escrows Real Estate taxes, Insurance escrow and Replacement reserve escrow deferred.
Replacement Reserves Underwritten based on the property condition per SBL Physical Risk Report (Form 1104)
Recourse Non-recourse with standard exceptions for fraud and misrepresentation
Commercial Space No more than 25% of effective gross income and no more than 25% of property’s total square footage. Final determination by Freddie Mac.
Required Reports Appraisal, Properly Condition Assessment and Phase I Environmental, Zoning, Insect and Flood
Investor/Sponsor Units The total number of investor or sponsor units is limited to 25% of the total number of units. Any single investor/sponsor owning more than 20% of the units in the Co-op must submit financial statements.
Physical Condition
  • Stable operating properties only
  • Critical Repairs: must address prior to closing
  • All other repairs: must address within 12 months post-closing and escrowed at 100% if they exceed 5% of loan amount
Prepayment Declining schedules and yield maintenance available for all loan types.
Cash Reserves The Co-op’s reserves must be at least 20% of the annual maintenance fee collection.
Maintenance Charges The debt service resulting from the proposed loan must not require a maintenance fee charge increase of more than 20%
Subordinate Financing Unsecured line of credit financing of up to 15% of the UPB allowed from a nationally charted bank for the purposes of repairs and maintenance of improvements.
Pricing Below top-tier market per pricing grid.
Rate Lock Standard delivery 12-days. Early rate-lock 2-3 days.
Application Deposit $12,500. Covers all estimated underwriting costs (including application fee).
Legal/Closing Fee Arbor’s Counsel Fee to be determined at application
Good Faith Deposit 1% of loan amount due at rate lock.
Arbor Commercial Mortgage | arbor.com | 800.ARBOR.10

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