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New Multi-Family
One Time Close Financing Program
One Time Close Construction/Substantial Rehabilitation Insured Program
Establish The Market
The first step of this loan process is to engage a feasibility study to determine marketability and to establish market rents and operating expenses. Additional items required at this stage include a project description including amenities, preliminary site, building and unit plans; rough, estimated project costs; and environmental reports. At the conclusion of processing the pre-application, we will issue an Invitation Letter, which is a written commitment agreeing that the project is both feasible and setting NOI to be used for under- writing. This agreement sets the maximum mortgage based on debt service coverage, and helps to finalize borrower equity requirements.
Determine the Costs
During the second phase of the loan process, analyzes the borrower, property manager and general contractor, as well as the the final architectural plans, specifications and construction costs. Additional due diligence items during Phase II include zoning accept- ability, site control and other typical commercial loan requirements. Processing of this phase also includes a Cost and Architectural/ Engineering review to determine acceptability of final design and cost estimates. At the conclusion of this phase, WE issue a Firm Commitment to finance the project, and the interest rate for both the construction and permanent mortgages may be locked.
The Anticlimax
The closing is the final step for both the construction and the 40 Year permanent financing. Because the interest rate is locked for both mortgages, developers do not have to worry about permanent loan interest rate risk. To a certain extent, closings for this program are anticlimactic because our Firm Commitments are, quite literally, firm, final commitments with no conditions.
Unlike typical bank construction financing, when we issue a commitment, we have finalized and approved all relevant items, including final design approval, cost approval, general contractor approval, etc. In fact, our closings are also Construction Draw #1, and all borrower pre-paid items (architecural, survey, engineering, etc.) are drawn down at this stage and either credited to borrower equity requirements, or paid to the borrower
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