Over the past month, VHDA has begun offering lower taxable and tax-exempt rates for long-term fixed rate financing. Tax-exempt loans now have a lower rate during construction with a permanent rate dependent on the length of the construction contract.

All construction/permanent loans greater than $7.5 million will carry combined processing and financing fees of 2% on the first $7.5 million and 1.125% on the balance.

The following detailed information regarding these changes was released by VHDA on September 8:

I.          Loan Interest Rates

VHDA multi-family base loan rates have been reduced. This includes interest rates on loans funded with both taxable and tax-exempt debt, but not the REACH program. The daily rate sheet found on our website now reflects the new rates. Furthermore, on tax-exempt debt VHDA now provides a reduced interest rate during the construction period, as currently exists in the taxable program.

II.         Loan Fees

    1. Application Fee. For all loans, there will continue to be a $10,000 Application Fee submitted with the loan application. The Application Fee will be credited toward the Processing Fee.
    2. Processing Fee. For all loans, the Processing Fee will remain at 0.5% of the loan amount, and will be inclusive of the $10,000 Application Fee. However, Processing Fees will now be collected prior to issuance of the Commitment.
    3. Financing Fee. In addition to the Application Fee and Processing Fee, Financing Fees will continue to be charged on all loans. Financing Fees remain payable upon acceptance of the Commitment.

a.     For permanent loans (both immediate and forward delivery), the Financing Fee remains unchanged at 0.5% of the loan amount.
b.     For construction/permanent loans up to $7.5 million, the Financing Fee remains unchanged at 1.5%. However, Financing Fees have been reduced to 0.625% on the portion of any such loan above $7.5 million.

c.     For REACH funds, VHDA has historically provided a half point discount on the financing fees charged for the REACH portion of any loan. Going forward fees will be calculated, as described above, on the total loan amount, irrespective of any REACH allocation.

  1.  Standby Fees. Standby Fees will continue to be required to be paid upon the acceptance of the Commitment and held until loan post-closing items have been submitted. It is our intent to hold three points in aggregate among the Processing, Financing and Standby Fees; thus the Standby Fee will be calculated as 3% of the loan amount minus the sum of the Processing and Financing Fees.

III.        Loan Amortization Period

All loan terms reflected on the published daily rate sheet assume a fully amortizing 30-year loan. VHDA will consider amortization periods up to 35 years on a case by case basis. The interest rate on any loan with an amortization period over 30 years will include a rate premium to be determined at the appropriate time.

IV.        Prepayment Lockout Period

Current policy for loans funded with taxable debt requires a 10-year loan prepayment lockout period beginning on the date of the Deed of Trust Note. For loans funded with tax-exempt debt, policy requires a 15-year loan prepayment lockout period beginning on the date on which 50% of the units in the development are first occupied, as determined by the Authority.

Going forward, loans funded with taxable debt will have the 10-year loan prepayment lockout period begin with the date on which 50% of the units in the development are first occupied, as determined by the Authority. This change reflects the Authority’s desire for the lockout period to begin when the development is majority occupied, thus providing for a longer period of affordability.

V.          REACH Funds

REACH funds will continue to be made available as per current policy. The published base rate on REACH funds remains unchanged at 2.95%. For purposes of applying for low-income housing tax credits, you may assume a REACH allocation in accordance with the Increased REACH Allocation Limits that were announced February 17, 2017. [Click here to see that announcement] Please understand that the assumption of any REACH allocation in connection with LIHTC application is primarily for determining the credit amount being applied for and its relation to application scoring. Final REACH allocations will be determined during loan underwriting.

We hope that you find these changes helpful. Feel free to contact Dale Wittie or Bennett Atwill if you have any questions.

Dale Wittie: (804) 343-5876, dale.wittie@vhda.com

Bennett Atwill: (804) 343-5768, bennett.atwill@vhda.com