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Freddie Mac Bond Credit Enhancement
(With Other Affordability Components)

Freddie Mac offers a credit enhancement program for fixed- or variable-rate multifamily housing bonds with other affordability components (without 4% tax credits). This program allows Freddie Mac to serve as a liquidity provider and credit enhancer on newly issued or refunded bonds. Whether you want to refund your current multifamily bonds or replace an existing credit enhancement, Freddie Mac delivers a full array of advantages for your financing needs.

We invite you to talk to one of our Seller/Servicers through the Freddie Mac Targeted Affordable Housing (TAH) Delegated Network to learn more about our affordable housing products and offerings.

Key Benefits

• Replacement of direct-pay letters of credit, usually without overhauling original bond documents.
• Easy, convenient approval process for fixed-rate or variable-rate bonds.
• Fixed-rate loans with HUD Risk Sharing may be allowed more favorable LTV and DCR terms.

At-a-Glance Comparison

Eligible Transactions	Replacement of existing credit enhancement facility or new credit enhancement facility for tax-exempt bonds for refundings, acquisition and acquisition/rehabilitation. Fixed-Rate: Including put bonds (balloons) and remarketing/redemption bonds Floating-Rate: Acquisition and acquisition/rehabilitation or refunding of floating-rate tax-exempt bonds Credit Substitution: Fixed- and variable-rate direct-pay letter of credit substitution available
Eligible Properties	Garden, mid-rise and high-rise multifamily properties with minimum occupancies of 90% for 90 consecutive days
Eligible Seller/Servicers	Seller/Servicers through the Freddie Mac TAH Delegated Network
Loan Terms	10 to 40 years
Maximum Amortization	30 years
Minimum Debt Coverage Ratio	1.20x 1.15x for fixed-rate loans with HUD Risk Sharing
Maximum Loan-to-Value	Variable-rate – 85% of market value or 80% of adjusted value Fixed-rate – 85% of market or adjusted value Fixed-rate w/ HUD Risk Sharing - 90% of adjusted value
Prepayment Provisions	Yield maintenance required - typically 15 years
Subordinate Debt	Available
Recourse Requirements	Non-recourse except for standard carve-out provisions
Appraisal, Environmental, and Engineering Report	Required per TAH Guide on AllRegsTM
Property and Real Estate Tax Escrow	Required per TAH Guide on AllRegs
Application Fee	Greater of $3,000 or 0.1% of loan amount
Servicing Fee	Based on a sliding scale. Guaranteed for term of lockout period under bond documents.

Contact Us

• Download and print Freddie Mac's contact information

PDF Version

• Download the Bond Credit Enhancement With Other Affordability Components term sheet.

The information in this document is not a replacement or substitute for information found in the Delegated Underwriting for Targeted Affordable Housing^SM Guide on AllRegs. Terms set forth herein are subject to change without notice.