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The Latest on Tax-Exempt Financing
2017 Targeted Affordable Housing Seller Workshop
© Freddie Mac
Tax-Exempt Products
2
Tax-Exempt Loan
• More efficient, more cost effective alternative to publically offered tax-exempt bond credit enhancement
• Private placement loan product with fewer documents and participants
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 30 years
for fixed-rate execution and 10 years for variable rate
• Max. amortization of 35 years
• Minimum 10-years prepayment protection
Credit Enhancement for Direct Placement
Bonds
• More efficient, more cost effective alternative to publically offered tax-exempt bond credit enhancement
• Private placement bond product with fewer documents and participants
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 15 years• Max. amortization of
35 years• Minimum 7-years
prepayment protection
Cash Loan with Short-Term Bonds
• Cash loan, secured by the property, that provides collateral for tax-exempt bonds with 4% LIHTC
• Bonds paid off when units placed in service. Cash loan remains in place.
• Immediateexecutions
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 18 years• Max. amortization of
35 years• Yield maintenance
followed by defeasance
Bond Credit Enhancement with
4% LIHTC
• Traditional, publicly offered bond credit enhancement
• Public bond offering with multiple participants
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 35 years• Max. amortization of
35 years• Fee maintenance is
required
Bond Credit Enhancement with Other Affordability
Components
• New or replacement credit facility for tax-exempt housing bonds
• Public offering or private placement bond executions available
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.25x DCR*• Max. 85% LTV*• Terms up to 30 years• Max. amortization of
30 years• Fee maintenance is
required
Tax-Exempt Loan
• More efficient, more cost effective alternative to publically offered tax-exempt bond credit enhancement
• Private placement loan product with fewer documents and participants
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 30 years
for fixed-rate execution and 10 years for variable rate
• Max. amortization of 35 years
• Minimum 10-years prepayment protection
Credit Enhancement for Direct Placement
Bonds
• More efficient, more cost effective alternative to publically offered tax-exempt bond credit enhancement
• Private placement bond product with fewer documents and participants
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 15 years• Max. amortization of
35 years• Minimum 7-years
prepayment protection
Cash Loan with Short-Term Bonds
• Cash loan, secured by the property, that provides collateral for tax-exempt bonds with 4% LIHTC
• Bonds paid off when units placed in service. Cash loan remains in place.
• Immediateexecutions
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 18 years• Max. amortization of
35 years• Yield maintenance
followed by defeasance
Bond Credit Enhancement with
4% LIHTC
• Traditional, publicly offered bond credit enhancement
• Public bond offering with multiple participants
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.15x DCR• Max. 90% LTV• Terms up to 35 years• Max. amortization of
35 years• Fee maintenance is
required
Bond Credit Enhancement with Other Affordability
Components
• New or replacement credit facility for tax-exempt housing bonds
• Public offering or private placement bond executions available
• Immediate and Forward executions available
• Fixed- and Variable-rate executions available
• Min. 1.25x DCR*• Max. 85% LTV*• Terms up to 30 years• Max. amortization of
30 years• Fee maintenance is
required
*Higher leverage may be available in Tier 1 and Tier 2 markets.
TAH Seller Workshop – The Latest on Tax-Exempt Financing
Tax-Exempt Loans (Including Flex TEL)
2017 Targeted Affordable Housing Seller Workshop
© Freddie Mac
April MorelandManager
Underwriting and Credit
Arthanais WilliamsRelationship Manager
Affordable Sales and Investments
Presenters
TAH Seller Workshop - Tax-Exempt Loans (including Flex TEL) 4
© Freddie Mac
Option for a 120-day pricing hold period
Up to 30-year loan terms are available on fixed-rate executions; up to 10 years on variable-rate executions
For Select Sponsors, the 2% Commitment Fee may be in the form of a note from the Sponsor and the Standby Fee may be reduced to 10bps annually
Immediate and Forward TELs
TAH Seller Workshop - Tax-Exempt Loans (Including Flex TEL) 5
© Freddie Mac
Counsel is shared between Freddie and the Seller
Immediate and Forward TELs (Cont’d)
TAH Seller Workshop - Tax-Exempt Loans (Including Flex TEL) 6
Certain TEL fees are underwritten in the I&E as an expense» Fiscal Agent Fees
» Governmental Lender Fees
» Rebate Analyst Fee
» Any other fee paid during the course of the loan that is not paid at closing
© Freddie Mac
Immediate TEL only Floating rate during initial rehab
period (3-year maximum) Fixed rate for the remainder of the
loan term Index for fixed-rate period locked
at the same time the spread is locked
Doesn’t create additional proceeds or change loan size
Lock-out during floating rate period and for 10 years after TEL converts to fixed rate
Floating rate period is hedged with rate cap
No early rate or spread locks
Flexible Tax-Exempt Loan (Float-to-Fixed)
TAH Seller Workshop - Tax-Exempt Loans (Including Flex TEL) 7
