New Freddie Mac Multifamily Mortgage Programs by YouCheckCredit.com

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by: aikensmiths
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Date: Sat, 20 Nov 2010 Time: 8:16 AM
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The recent announcement by Freddie Mac, a leader in the secondary mortgage market, offers options to borrowers seeking to finance the purchase and upgrade of existing multifamily properties. According to a Freddie Mac spokesperson, two new products, the Acquisition Rehabilitation Mortgage and the Acquisition Upgrade Mortgage, give qualified “new owners/operators who want to renovate, one mortgage and one lender to both purchase and upgrade or rehabilitate an existing multifamily property.”

The Acquisition Rehabilitation Mortgage gives borrowers a way to make more substantial improvements to their properties. The total repair cost must be a minimum of $10,000 per unit but must not exceed the lesser of $30,000 per unit or 30% of the acquisition cost.  Repair costs generally permitted include upgrades to interior and/or exterior finishes to the units and/or common areas, new kitchen and/or bathroom fixtures and cabinets, new roofing, new boilers, and/or resurfacing of parking lots. The benefit to borrowers is the ability to finance a higher percentage of their overall project costs since the size of their loan is tied to a percentage of loan-to-purchase with an upper limit of 90 percent.

The Acquisition Upgrade Mortgage is a way for borrowers to perform light rehabilitation or cosmetic improvements, which may include deferred maintenance items. A minimum total repair cost of $3,000 per unit not to exceed the lesser of $10,000 per unit or 20% of acquisition cost is required. Borrowers may obtain financing up to 86% of loan-to-purchase and 80% loan-to-cost. Repair work must be cosmetic in nature and may include upgrades to existing interior and/or exterior finishes and/or common areas or new kitchen and/or bathroom cabinets and/or fixtures.

Borrowers receive guaranteed permanent financing with both acquisition and upgrade/rehabilitation being funded in a single first lien mortgage.

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