Full escrows for property taxes and all applicable insurance are funded at closing and must be maintained throughout the life of the loan. A Replacement Reserve account must be established at closing and is made available for replacement of depreciable capital items. An Operating Deficit escrow will be required by HUD to cover operating losses until sustaining occupancy is reached and funded with cash or a letter of credit.
This is a non-recourse loan. Long loan term - up to 40 years, fully-amortizing. Low, fixed interest rates. Loan-to-cost ratio up to 90%. Most affirmative and negative loan covenants typically found in conventional loan agreements are eliminated. Converts to permanent financing upon completion at no extra cost. No low-income tenancy requirements. Fully assumable subject to CMI and HUD approval. Can be used as a credit enhancement for tax exempt bonds.
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