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SBL Program Update

September 23, 2016

This edition of the Small Balance Loan (SBL) Program Update includes:

For questions, we encourage you to contact your Freddie Mac representative.

Updated SBL Exceptions and Credit Risks Document

An updated version of the SBL Exceptions and Credit Risks document is available on our website.  Changes and clarifications include:

Changes

  1. Modified rent/income restriction exception to reflect new SBL alternatives for rent and income restricted properties
  2. Added an exception for owner occupied units that do not meet the new 1.00x stress test or recourse requirements
  3. Modified loan to cost exception to reflect new program threshold (80% within 1 year of acquisition/refinance)
  4. Removed the seismic exception — our seismic policy update is in process and under the new policy, no exceptions will be available. Please contact your Freddie Mac representative to learn about the new policy prior to an upcoming Guide update

Clarifications

  1. Tax abatement
  2. Amperage
  3. Scattered site
  4. General eligible properties

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Income and Rent Restricted Properties – 50 Units or Less

The SBL Program now provides financing for the acquisition or refinance of the following properties with 50 units or less:

  • Low-Income Housing Tax Credit (LIHTC) properties with Land Use Restriction Agreements (LURAs) in the extended use period or in the final 24 months of the initial compliance period (in both cases, provided the tax credit investor has exited the project)
  • Properties with certain regulatory agreements with local, state, or federal housing authorities that impose income and/or rent restrictions

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Pre-screening Review Process for Recorded Regulatory Agreements/Regulatory Agreement Questionnaire – SBL

For each recorded Regulatory Agreement:

  • Seller must submit the Regulatory Agreement Questionnaire – SBL completed by Single Counsel and a copy of the Regulatory Agreement (including all amendments, schedules and exhibits) to the appropriate SBL Regional Production Team for pre-screening, along with a summary of the terms and characteristics of the proposed Mortgage.
  • Freddie Mac will review the completed Questionnaire and other pertinent information about the property and borrower and either approve the loan to proceed or follow up with open questions/issues.
  • Once a loan proceeds, Seller must also include a copy of the completed Questionnaire in the full underwriting package.

Please Note:

  • Properties with tax abatements will continue to require the Tax Abatement Analysis.  If the property also has a recorded regulatory agreement, the Regulatory Agreement Questionnaire – SBL will be required.
  • Unless Freddie Mac has additional questions after its review regarding the Questionnaire or the regulatory agreement, no additional PLIM will be required for regulatory agreements.
  • There will be a 10-25 bps premium increase for affordable housing loans with regulatory agreements based on market tier and competition.  The weekly pricing grid will provide the premium adjustments.

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New Format for Rate Lock Confirmation Email

We have begun using a new format for our contract confirmation emails. The new format is below.

Subject: Deal (Loan# XXXXXXXXX) has achieved Rate Lock status

The following Deal has achieved a deal status of Rate Lock:

*Loan Number:

 

XXXXXXXXX

*Deal Name:

 

XXXXXXXXXXXXXXXX

*Property Address:

 

XXXXXXXXXXXXXXXX

*S/S Name:

 

Seller Name

*Loan Amount:

 

$3,500,000.00

*Originator Name:

 

XXXXXXXXXXXXX

*Lien Position:

 

1

*Loan Purpose:

 

Acquisition

*Deal Product:

 

SBL

*Mandatory Delivery Date:

 

09/28/2016

*Contract Number:

 

XXXXXXXXXXXXXX

*Mandatory Funding Date:

 

10/13/2016

 

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