FHA Section 223(a)(7) Mortgage Insurance Program

PURPOSE Permanent non-recourse mortgage financing for the refinance of mortgages on multifamily projects already insured under the National Housing Act. Allows owners to reduce debt service requirements and accomplish needed repairs. ELIGIBLE PROJECTS Multifamily and healthcare properties that currently have FHA insured loans. BORROWER Single-asset, special purpose entity, either for profit or non-profit. RECOURSE Non-recourse* INTEREST RATE Fixed for term of loan, determined by market conditions at time of rate lock. Rate lock deposit is o.5% and refunded at closing. LOAN TERM Shorter of remaining term plus 12 years or original mortgage term. ASSUMPTION/PREPAYMENT Negotiable with best pricing for 10 years of call protection (can be a combination of lockout and/or penalty); loan is fully assumable subject to HUD approval. LOAN PARAMETERS Maximum loan amount will be the least of the original principal balance when first insured or parameters below; no equity take out is permitted under section 223(a)(7) Property type Minimum Debt Service Coverage Maximum Loan to Refinance Cost* Cash Out Subsidized 1.05x 100% Not Permitted All Other 1.11x 100% RESERVES Transfer of Replacement Reserve Escrow Account and annual payments to this account required. HUD will determine if the current monthly escrow is sufficient. REPAIR LIMITATIONS Up to $1,500 per unit plus required accessibility and life-safety repairs. MORTGAGE INSURANCE PREMIUM 0.50% due to HUD at closing and 0.5% annually thereafter. *0.25% for Energy Star certified properties through HUD’s Green MIP program 0.25% to 0.35% for affordable and subsidized prperties Healthcare: 0.5% due to HUD at closing and 0.55% annually thereafter; escrowed monthly. HUD APPLICATION FEE 0.15% of estimated loan amount due with submission of application. RESTRICTIONS Processing contingent upon completed transfer of physical assets (TPA), if applicable. Current lender must obtain Insurance Termination Approval from HUD Headquarters Note: All Replacement Reserve, Taxes & Insurance Escrows will be transferred Nothing contained herein is intended to be, nor should it be construed as, a commitment to lend on these or any other terms. Arizona MB007451