Biden proposes to redress changes from the The Tax Cuts and Jobs Act of 2017. Here are the proposed changes by Biden:
Trump proposes to return Freddie Mac and Fannie Mae to private ownership. Biden proposes to focus Fannie Mae and Freddie Mac to increase apartment affordability which expands upon the current Fannie Mae Standard DUS mortgage criteria.
Fannie and Freddie don’t lend money directly to apartment owners. Instead, they buy mortgages from lenders, repackage them into securities and sell those securities to investors.
The investors are protected against losses by Fannie and Freddie’s guarantee backed by the Treasury Department.
The Freddie Small Balance Program is for 5+ multifamily units. Terms are $1 million to $5 million, 5 to 10years, max luv 80%, rates can be fixed and either balloon or roller over to a 20-year hybrid, up to 30-year amortization, rate locks up to 120-days, and assumable. In addition, replacement reserves and insurance escrow get waived and tax escrow gets waives for LTVs at or below 65%. To qualify, a borrower (aka the sponsor) must have a minimum 650 credit score, have a net worth equal to the loan amount, and liquidity equal to 9-months of debt service payments. These are non-recourse loans.
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