Eligible Properties: 

• 4% LIHTC Properties

• 80-20s (deals in which 20% of the property is set aside for low income residents)

• Refunding of existing bonds

Advantages

• Competitive interest rates (typically 0.20-0.25% better pricing than regular bond credit enhancement)

• Up to 90% LTV allowance

• Up to 35 year amortization

• Interest-only options

• Flexible structure and certainty of execution

• Wide investor base

• Tax-exempt or taxable interest allowed

Case Study: Rehabbing an Atlanta Property

Let's consider the case of Elena, a dedicated investor and developer based in Atlanta, Georgia, who is committed to rehabilitating Multifamily Affordable Housing (MAH) developments in her community. She has recently acquired a property set aside for low-income residents under the 80-20 scheme and intends to renovate and preserve the affordability of this property. In order to fund this project, Elena looks to Fannie Mae's MBS as Tax-Exempt Bond Collateral (M.TEB) program.

The project Elena is working on fits well within the eligible properties for M.TEB financing, as it involves the rehabilitation of an 80-20 property. She also plans to utilize 4% Low-Income Housing Tax Credits (LIHTCs), which again, aligns with the conditions of the M.TEB program.

Since there is no minimum or maximum loan size for M.TEB financing, Elena has the flexibility to request funds according to the specific needs of her project. She estimates the cost of rehabilitation at $12 million. Taking advantage of the generous LTV allowance of up to 90% under the M.TEB program, Elena could secure financing up to $10.8 million.

Fannie Mae's M.TEB program offers loan terms between 10-30 years and amortization periods of up to 35 years, providing Elena with flexibility in loan repayment. The program also provides fixed, variable-rate, and interest-only loan options. This variety allows Elena to choose the type of interest rate that aligns best with her financial strategy and the projected cash flow from the property.

One of the key advantages of the M.TEB program is its competitive interest rates, typically 0.20% to 0.25% better than regular bond credit enhancement. This means Elena could potentially save a significant amount of money over the life of the loan, making her rehabilitation project more financially feasible.

By opting for Fannie Mae M.TEB financing, Elena can not only secure the necessary funding for her rehabilitation project, but also contribute to the preservation and availability of affordable housing in her local community.

This is a fictional case study provided for illustrative purposes.

In this article:

1. Fannie Mae Issued Taxable and Tax-Exempt Bonds for Financing the Rehabilitation of Affordable Multifamily Developments
2. Sample Fannie Mae Terms For MBS as Tax-Exempt Bond Collateral (M.TEB) in 2024
3. Advantages
4. Case Study: Rehabbing an Atlanta Property
5. Get Financing