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Fannie Mae Tax-Exempt Bond Credit Enhancement

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Fannie Mae Tax-Exempt Bond Credit Enhancement

The Fannie Mae Tax-Exempt Bond Credit Enhancement provides credit enhancement for tax-exempt bonds issued to finance the acquisition, new construction, refinancing, or moderate or substantial rehabilitation of multifamily properties.
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Fannie Mae Tax-Exempt Bond Credit Enhancement Program Guidelines

Benefits
  • AA+ rating keeps borrowing costs low
  • Ability to provide affordable housing
  • Flexible financing structures
  • Up to 90% leverage
  • 1.15 minimum DSCR
Eligibility
  • Multifamily Affordable Housing properties with Low Income Housing Tax Credit Rent Restrictions
  • New money issues, refundings, or credit substitutions where Fannie Mae takes the place of an existing credit enhancer without issuance of new bonds
  • Fixed-rate bonds only
Amortization 30 years.
Minimum DSCR 1.15.
Maximum LTV The greater of 90% of market value or 80% adjusted value for properties with LITC units equal to or above 90%; the greater of 85% of market value or 75% of adjusted value for all others.
Prepayment Penalty The greater of 1% or yield maintenance.
Guarantee Non-recourse for most loans subject to standard carve-outs.
Subordinate Debt All subordinate debt is required to be fully amortizing. Debt which requires principal reduction payments is allowed only if provided by the public sector.
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