By Pat Jackson, President and CEO, Sabal Capital Partners, LLC
Nearly every market in the U.S. is currently faced with a lack of affordable housing. Increased cost of living, lack of supply, zoning restrictions, growing cost of construction and many other factors all contribute to the estimated 7.2-million-unit shortage nationwide. As the public and private sectors explore how to work together in hopes of filling this gap, debt programs focused on the financing of existing affordable housing are in steep demand.
Freddie Mac’s Targeted Affordable Housing Express (TAHX) program is one program that provides a simple and efficient solution for affordable properties nationwide. For borrowers seeking a small balance loan up to $10 million, here are just a few of the many benefits Freddie Mac’s TAHX product offer:
1.) Streamlined Process: Freddie Mac’s TAHX program provides easier pre-screening, streamlined loan documents and an abbreviated list of required project paperwork, simplifying the underwriting process.
2.) Lower Fees: Freddie Mac’s TAHX fees are significantly below industry norms. For a standard deal structure, fees are typically less than $25,000.
3.) Broad Definition of Affordable: The definition of affordable housing under the TAHX program is rather flexible. Where affordable housing often more narrowly describes a category where occupants pay no more than one third of their income for housing, the definition of affordable housing under the TAHX program is much more flexible. Properties under this typical definition of affordable as well as workforce (often defined as housing for those earning 60 to 120% of the area’s annual median income) and below-market multifamily can qualify.
Specifically, uncapped multifamily stabilized properties with one or more of the following characteristics are eligible:Low-Income Housing Tax Credit (LIHTC) properties in at least year 11 of their compliance period
– Long-term Housing Assistance Payment (HAP) contracts
-Regulatory agreements that impose rent/income restrictions
-Section 8 vouchers
-Tax abatements
4.) Payment Flexibility: The TAHX program offers a variety of pre-payment options for borrowers, including a declining schedule and yield maintenance for all loan types. It also offers a cash-out option, which is nearly unheard of in current bank products.
As the conversation surrounding the shortage of affordable housing units continues, programs like Freddie Mac’s TAHX will give borrowers easier access to much-needed capital for affordable properties nationwide.