NEW YORK, NY – September 15, 2009 – (RealEstateRama) — “nyhomes,” New York State’s affordable housing lender, today announced “Day 1”–a new program to offer credit enhancement on construction loans that finance renovations of affordable multifamily properties.
The program will offer “Aa1” mortgage insurance on HFA construction loans for moderate rehab of housing developments that agree to remain affordable for a minimum of 30 years. This type of insurance will reduce overall debt costs, allowing rents to remain affordable over the long-term.
“One of our most important missions at ‘nyhomes’ is to preserve affordable housing for low- and moderate-income New Yorkers,” said Priscilla Almodovar, President and Chief Executive Officer of “nyhomes.” “With the credit markets tightening and construction loans becoming more expensive or difficult to come by these days, ‘Day 1’ will provide access to construction financing and savings to these projects. In doing so, projects will move forward and, ultimately, the quality of life of the residents will be improved.”
“Day 1” is a collaboration between two “nyhomes” agencies: the New York State Housing Finance Agency (HFA) and the State of New York Mortgage Agency’s Mortgage Insurance Fund.
In 2008, “nyhomes” began to provide similar insurance to state-financed Mitchell Lama projects. With letter of credit fees rising and the value of the Federal Low-Income Housing Tax Credits still depressed, “nyhomes” decided to expand mortgage insurance for rehab projects of affordable multifamily projects where tenants remain in place during the renovation.
To be eligible, property owners must obtain financing from HFA and agree to keep their projects affordable for at least 30 years.
Traditionally, property owners with HFA financing obtain a bank letter of credit for their construction loan. However, today, even when credit enhancement can be obtained, fees for construction letters of credit have increased to between 200 and 300 basis points from 75 to 150 basis points in 2008. “nyhomes” will charge 125 basis points during construction for its mortgage insurance.
To learn more about the “Day 1,” multifamily property owners can contact David Walsh, HFA Senior Vice President for Multifamily Housing, at dwalsh (at) nyhomes (dot) org. To read the “Day 1” term sheet, click here.
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SONYMA’s Mortgage Insurance Fund was created in 1979 to provide insurance on multifamily mortgage loans for affordable housing made by commercial and public lenders and mortgage pool and primary insurance for single family mortgages purchased by SONYMA.
The NYS Housing Finance Agency was created in 1960 to sell bonds to finance the construction and rehabilitation of multifamily affordable rental housing in New York State.
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Contact: Philip Lentz
Director of Communications
212-872-0679
plentz (at) nyhomes (dot) org
