FREDDIE MAC ANNOUNCES MULTIFAMILY LIHTC MOD REHAB PRODUCT

New Tool for Affordable Units That Can Keep Tenants in Place During Rehab

McLean, VA – Freddie Mac (NYSE: FRE) announces an enhancement to its Multifamily Affordable Forward Commitment product to preserve affordable housing. The new Low-Income Housing Tax Credit Moderate Rehabilitation (LIHTC Mod Rehab) execution is designed for borrowers acquiring properties with affordable units and seeking to finance moderate rehabilitation while keeping their tenants in place.

In the LIHTC Mod Rehab executions, Freddie Mac provides up-front financing to accomplish moderate rehab for properties funded entirely, or in part, with low-income housing tax credits. The LIHTC Mod Rehab execution is available to approved Seller/Servicers for properties that have received either a four percent tax credit tax-exempt bond execution or a nine percent tax credit cash execution.

"Freddie Mac's new LIHTC Mod Rehab execution has several features that are important to our lender customers, including a less costly and more efficient execution with no interim financing," said Mike May, senior vice president of Multifamily Sourcing for Freddie Mac. "Freddie Mac is focused on delivering creative, flexible financing structures that meet our customer's business needs, and to ensure that more properties for low-moderate income individuals get the financing they need."

LIHTC Mod Rehab benefit:

Maximize up-front proceeds. Full proceeds based on the after-rehabilitation net operating income and value are available at closing. No mezzanine or bridge financing is required.
Greater cost efficiency than the current Forward Commitment since forward commitment fees are not required, and a letter of credit in the full amount of the permanent proceeds is not required. The property serves as the primary collateral with only a small letter of credit required as additional collateral.
An easier execution than a Forward Commitment since there is no conversion process.

How LIHTC Mod Rehab Works:

The Loan-to-Value, Debt Coverage Ratio, and other terms are comparable to those for forward commitments.
The property must be financed with Low-Income Housing Tax Credits.
The Mod Rehab must be accomplished with the tenants remaining in place, and the property must maintain breakeven occupancy.
Interest-only financing during the Mod Rehab period is available.
Freddie Mac funds for the Mod Rehab are held in a Mod Rehab escrow administered by the Seller/Servicer and based on the terms of a Mod Rehab Agreement.
The total Mod Rehab cost should not exceed the greater of $25,000 per unit or 30 percent of acquisition cost.

Examples of typical Mod Rehab improvements include upgrades to the interior finish of units, lobbies and elevator cabs; new kitchen and bathroom cabinets and fixtures; new boilers and roofs; brick pointing; and parking lot resurfacing.

More details can be found at http://www.freddiemac.com/multifamily/.

Since the introduction of the Freddie Mac Program Plus network of multifamily loan originators and servicers in 1993, Freddie Mac has provided financing for over 40,000 multifamily properties totaling more than $100 billion.

Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and nearly four million renters.

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