FHA Section 223(f) Mortgage Insurance Program

PURPOSE Permanent non-recourse mortgage financing for the refinance or acquisition of existing apartments and cooperatives. Minimum rehab allowed, up to $6,500 per unit before area cost adjustment factor. ELIGIBLE PROJECTS Market rate properties of any class, cooperatives, affordable or subsidized housing. Construction or any substantial rehabilitation must have been completed at least three years before application to HUD. 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 A maximum term of 35 years, fully amortizing. Second Mortgages Permissible, provided debt meets HUD’s criteria. ASSUMPTION/PREPAY 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 For loan amounts up to $75 Million: Property Type Maximum Loan to Eligible Cost Minimum Debt Service Coverage Acquisition Loan to Cost Refinance Loan to Cost* Subsidized 90% 1.11x 90% 80%-85% Affordable* 87% 1.15x 87% Market Rate 85% 1.176x 85% For loan amounts $75 million and above, although HUD may impose more restrictive limits on loan amounts over $100 million: Property Type Maximum Loan to Eligible Cost Minimum Debt Service Coverage Acquisition Loan to Cost Refinance Loan to Cost Subsidized & Affordable* 80% 1.25x 80% 70% Market Rate 75% 1.30x 75%   *See Paragon for details on cash-out transactions. In addition, loan cannot exceed the programmatic per-unit maximum as adjusted by HUD for project location (area high cost factor). RESERVES Initial funding of a Replacement Reserve Account and annual payments to this account required. The initial amount is determined by HUD, which analyzes the remaining useful life of the property’s depreciable components (appliances, roofs, etc.). The annual deposit to the Reserve account is determined by the HUD appraiser. REPAIR COSTS Up to $15,000 per unit times a local cost factor (typically 190%-270%); additionally, repairs may not replace more than 50% of any two building systems: electrical, plumbing, mechanical, building envelope, structural. 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