Freddie Mac announced two new loan products this week aimed at addressing housing affordability. The products are structured as mezzanine loans that will provide additional funds for multifamily properties that are, either, workforce housing or have an affordable rent subsidy.
The most attractive feature for borrowers is that the loan term will be for the full term of the underlying senior loan and the interest rates will be two percent to four percent below market for comparable mezzanine loans. In return for obtaining financing under this program, the borrower will have to maintain a minimum number of units at rents that are at or below 100 percent of area median income, and to limit rent growth to an agreed upon index based on CPI.
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