PROGRAM
DESCRIPTION: Loan guarantees are
provided in partnership with public and private lending institutions to
provide rental housing for low and moderate income households in rural
areas.
TYPE OF
ASSISTANCE: Loan purposes include new
construction, and purchase and rehabilitation of existing housing
projects. Focus will be on the creation of new units and related
facilities, not refinancing. Eligible housing types include family,
elderly, rental mobile homes and parks, and congregate.
ELIGIBILITY REQUIREMENTS:
Borrowers may be nonprofit corporations, public bodies, or for-profit
entities. Eligible lenders are those approved and currently active in the
HUD/FHA, Fannie Mae, or Freddie Mac multifamily housing programs, and
State or local housing finance agencies, members of the Federal Home Loan
Bank System or other lenders who receive approval from RHS. Eligible
tenants are those with household incomes that do not exceed 115 percent of
the area median income.
FUND AVAILABILITY:
The guarantee budget authority will be published as an annual Notice of
Funds Availability (NOFA) in the Federal Register. Lender responses will
be accepted each year during the funding cycle. The guarantee will be
limited to 90 percent of the loan amount.
INTEREST RATE:
The interest rate will be negotiated between the lender and borrower and
must not exceed the maximum rate specified in the annual NOFA.
The loan must bear a fixed rate of interest over the entire term.
TERMS:
Terms of loans guaranteed may be up to 40 years and must be fully
amortized. Loans must remain affordable to eligible households for the
term of the loan - this requirement is statutory.
COLLATERAL:
A first mortgage or deed of trust is required.
FEES:
A fee of $2500 will be collected when a formal application is filed. The
initial loan guarantee fee is 1 percent of the note principal amount times
the percentage of guarantee. The annual servicing fee is 0.5 percent of
the outstanding loan balance.
CREDIT REQUIREMENTS:
A 3 percent equity contribution will be required from nonprofit or public
body owners. A 10 percent equity contribution will be required from
for-profit owners.
CONTACT: NOFA information, program information packet, and
lender briefing packet are available through the Multi-Family Housing
division at the USDA Rural Development state office in
St. Paul
(
375 Jackson St., Suite 410
; 651-602-7800).
Minnesota
