Joshua Reiss is a vice president with Hunt Mortgage Group,
a wholly-owned subsidiary of the Hunt Companies. Based
in New York, Reiss is responsible for structuring and marketing the company’s platform of affordable-housing loan
products. Hunt Mortgage Group offers Fannie Mae, Freddie
Mac and Federal Housing Administration executions as well
as proprietary financing for multifamily and most other
commercial assets. Reach Reiss at (212) 317-5747
Explore the Freddie Mac Fast Track
TAH Express streamlines the process and costs of securing affordable-housing financing
By Joshua Reiss
Cities around the United States have been suffering from a housing-affordability cri- sis for a number of years. The gap between the supply of and demand for affordable
housing has been growing as the costs of land and
The current annual housing shortfall nationally is
some 400,000 units, even after taking into account
single-family construction starts, according to Freddie
Mac research. To make matters worse, the existing
affordable-housing stock is often in dire need of improvement and substantial renovations.
Although it is clear that there is already a significant
shortage of affordable housing across the country,
the recent tax reform threatens to exacerbate the
problem by reducing the value of low-income housing
tax credits, the single largest capital subsidy in the
affordable-housing business. This act has diminished
a substantial incentive for developers to undertake
the expense and regulatory challenges of building
targeted affordable housing.
To help address this widespread problem and remove
some of the roadblocks facing affordable-housing
owners and investors, Freddie Mac announced a new
Targeted Affordable Housing (TAH) Express program in
October 2017 and officially launched it this past April.
The program intends to change the way that smaller-balance cash-preservation loans are implemented by
providing borrowers with more choices, better terms
and, notably, a fast and simpler loan process. For
commercial mortgage brokers, TAH Express is a great
option to present to clients interested in owning and
preserving affordable housing.
TAH Express defined
TAH Express is an extension of Freddie Mac’s existing
TAH program, which provides loans for properties in
underserved areas that are affordable to families with
low and very low incomes, including cash loans, bond
credit enhancements, tax-exempt loans and more. As
opposed to naturally occurring affordable housing
or workforce housing, targeted affordable housing
means the property has rent or income restrictions in
place to maintain affordability for an extended period.
Through the TAH Express program, borrowers benefit
from a condensed prescreening process, simplified
nonnegotiable legal documents and a standardized
underwriting process, resulting in lower transaction
costs. TAH Express also offers a “step-down” prepayment option, which provides more flexibility in the
prepayment of these smaller loans.
TAH Express is available for acquisition or refinance
loans nationwide, offering loan amounts up to $10 million
in all markets. Borrowers are encouraged to have experience operating an affordable multifamily property.
The net worth of the borrower must be equal to the
loan amount, with liquidity equal to nine months of
principal and interest.
The property must be stabilized at or above
90 percent physical occupancy for the trailing three-month average prior to underwriting in most cases,
according to Freddie Mac’s description of the program.
The property may be stabilized at 85 percent physical
occupancy for the trailing three-month average prior to
underwriting, however, if the property has been built
or renovated recently in a top market, is composed of
fewer than 30 units, or if the deal meets certain other
conditions. Among those conditions are the following:
no history of serious crime at the property, no history of
volatile occupancy swings with the property, and that
the acquiring owner and new management are considered “sophisticated” relative to the current ownership.
Loans can be five-, seven-, 10-, or 15-year fixed-rate
loans, or five-, seven-, or 10-year floating-rate loans with
30-year amortization. Currently, Freddie Mac mainly
offers partial-term interest-only loans, but a full-term
interest-only option may be available in strong markets.
All loan types are eligible for a declining prepayment-penalty schedule and yield maintenance.
Subordinate debt is permitted, subject to a non-negotiated Freddie Mac subordination agreement, and
acceptable subordinate lenders are limited to governmental entities, community development financial
institutions and nonprofits. All loans are nonrecourse
with standard carve-out provisions required.
“Keep Micros in Mind,”
“Brokers Can Provide Value by
For more articles on affordable
View these articles and more at
“Building Multifamily on a Budget,”
“Unlocking Tax-Credit Opportunities,”
Continued on Page 56 >>