Happy New Year!

As we embark upon a new year and you consider your affordable Low Income Housing Tax Credit (LIHTC) proposals, this is a great time to also consider your LIHTC debt financing options and Centennial Mortgage.

Centennial Mortgage is a mortgage bank providing capital through a variety of U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture (USDA) insured loan programs. Centennial originates, funds and services loans for multifamily, healthcare, and senior housing utilizing HUD and USDA mortgage insurance. Centennial provides services to cover all aspects of the financing process, aiding owners and developers in ensuring the success of their projects. Centennial has a long track record of lending success on a national basis with HUD and USDA loans in diverse markets. Centennial’s goal is to provide its clients with the best possible loan execution, pricing, and exemplary service.

Centennial Mortgage offers HUD debt financing for Multifamily Housing New Construction or Substantial Rehabilitation for LIHTC proposals with expedited processing via the HUD Section 221(d)(4) loan program.

HUD Section 221(d)(4) – LIHTC Program Key Features

  • High HUD priority for affordable housing.

Expedited processing with HUD’s goal to issue Firm Commitments within 30 days of an acceptable application and closing within 60 days thereafter.

  • Non-recourse loan.
  • Long loan term – up to 40 years in addition to the construction period fully-amortizing.
  • Low, fixed interest rates.
  • High loan-to-cost ratio up to 90% for rental assistance and 87% for affordable.
  • Most affirmative and negative loan covenants typically found in conventional loan agreements are eliminated.
  • Converts to permanent financing upon completion (no occupancy requirements) at no extra cost.
  • Fully assumable, subject to HUD and CMI approval.
  • Can be used as a credit enhancement for tax exempt bonds.
  • Debt service coverage ratio of 1.11 for rental assistance and 1.15 for affordable.
  • FF&E may be included as a mortgageable project cost.

Centennial Mortgage offers USDA 538 debt financing for Multifamily Housing New Construction or Substantial Rehabilitation LIHTC proposals in designated “Rural Areas” as defined by the USDA – population must be less than 35,000 via the USDA RHS 538 loan program.

USDA RHS 538 – Rural Housing Program Key Features

  • Non-recourse loan.
  • Security: Assets of the borrowing entity.
  • Long loan term up to 40 years.
  • Low fixed interest rate, fully amortizing.
  • Loan-to-value ratio up to 70%.
  • Loan-to-cost up to 90% for a for-profit enterprise and up to 97% for a not-for-profit enterprise.
  • The program can be used to guarantee permanent financing, or a combination construction and permanent loan. It cannot be used for a loan that covers only construction.
  • Fully assumable subject to Centennial and USDA approval.
  • A loan can be combined with other financing sources such as: Low Income Housing Tax Credits, HOME grants or loans, State, or local assistance (including tax-exempt bond financing) or a second bank loan.
  • Debt service coverage ratio of 1.15.
  • Not subject to Davis-Bacon requirements.

Please feel free to contact Terrance to discuss your affordable LIHTC proposals in detail, the HUD/USDA financing options, and the programs eligibility requirements.

Terrance D. Watkins
Vice President, Origination
M: 708.769.9191

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