One of the loan programs we offer is the Freddie Mac Multifamily Small Balance Loan (SBL) program. While you can't roll capex dollars into the loan like you can with Fannie Mae's Multifamily Loan program -- which we offer as well -- Freddie SBL is simpler, offers greater flexibility and is more cost-effective than any other agency backed execution available today.
Freddie SBL offers a combination of beneficial features that include:
Effective February 6, 2017:
Loan Limit Now up to $7.5 million.
Standard loan limit was increased from $5 to $6 million in all SBL Markets.
Loans between $6 million and $7.5 million are now available in Top and Standard SBL Markets for properties with 75 units or less.
New 3-1-0-0-0% Prepay Option - Only available in Top Markets on 5-year Fixed and Hybird loans.
Lower Base Rates and Customizable I/O - Interest-only costs were removed from the base rate. I/O can now be added in custom increments at 4 bps (currently) per year up to 10 years, subject to exception and pre-review.
I mentioned two SBL Markets (Top and Standard) above. Freddie SBL has four market tiers: Top SBL Markets, Standard SBL Markets, Small SBL Markets, and Very Small SBL Markets. Freddie assigns these tiers using MSA (Metropolitan Statistical Area), MiSA (Micropolitan) and County data.
Here's where many get tripped up, including many commercial mortgage brokers and lenders. Lets take a look at some examples.
Los Angeles-Long Beach-Anaheim, CA is a monster is terms of population and total renters. It's a Top SBL Market, yet Houston-The Woodlands-Sugar Land, TX, one of the largest MSAs in the United States is a Standard SBL Market.
Speaking of Texas, Austin-Round Rock, San Antonio-New Braunfels, and --the darling of the multifamily world right now-- Dallas-Ft Worth-Arlington are all Standard SBL Markets.
Amarillo, Beaumont-Port Arthur, College Station-Bryan, Corpus Christi, El Paso, Lubbock and Waco are all Small SBL Markets. And, there's a ton of Very Small markets, including Abilene, Midland, Odessa, Laredo, Longview, San Angelo, Sherman-Denison, and Wichita Falls.
A few more in case you haven't seen your target market. Phoenix-Mesa-Scottsdale, AZ - Standard; San Diego-Carlsbad - Top; Columbus, OH - Top; Kansas City, MO-KS - Standard.
Here are some real doozies. New York-Newark-Jersey City, NY-NJ-PA is made up of 25 counties - eighteen Top and the remainder Standard. Miami-Fort Lauderdale-West Palm Beach similarly has two Top and one Standard. Which do you choose...does it matter?
Why is this important?
Maximum LTV and Minimum DSCR requirements vary based on the market tier in which the property resides. Therefore, it's critically important you have a multifamily loan broker on your team that understands Freddie's market tiering and can quickly tell you what terms and leverage to use in your analysis.
Freddie Mac loans start at $1MM. Details on this and our other loan programs can be found at www.strongercapital.com/loan-programs. Please reach out anytime, for anything.