The LIBOR-based Adjustable Rate Mortgage (ARM) Product provides flexible financing for borrowers
seeking a variable rate mortgage. The ARM will finance up to 80% of the property value for terms of 5, 7 and 10 years. The
ARM features a conversion option, a wide range of interest rate caps, two prepayment options (1% or declining schedule), and
two index options (1 or 3 month LIBOR).
Product overview
Eligibility Standard multifamily properties. Interest only and Senior Housing loans
may be available on a waiver basis.
Loan amounts $500,000 minimum. (We prefer $3,000,000 minimum) No maximum.
Term/amortization 5, 7 or 10 year term Up to 30 year amortization
Interest rates Floating based on 1 or 3 month LIBOR
Debt service coverage ratio 1.0x minimum at the cap rate as determined by the borrower
Loan to value 80% maximum
Interest rate cap choices 200 to 600 basis points available in 50 basis point increments
Personal recourse Non-recourse with standard ?Carve-Outs? and Key Principal obligations
Conversion option Can convert to a 7 or 10 year fixed rate in months 13-60 of the
ARM loan with nominal fee
Prepayment 1 year lockout with 1% for the loan term or a declining prepay schedule
Origination fee 1% or less when applicable
Commitment fee 2% (refundable)
Third party fees Includes legal, appraisal, engineering, and environmental reports.
Seismic reports and survey may also be required.
Minimum occupancy requirement 90% sustained for 90 consecutive days (85% acceptable
for special circumstances)
Replacement reserve impounds Required - not less that $150/unit (waiver considered
for special circumstances)
Taxes and insurance impounds Required (may be waived for low leverage transactions)
Assumability Assumable with lender approval and a 1% fee
Supplemental mortgages Available after 1 year (up to 2 available, plus 1 more upon sale and assumption)
