Love Funding, one of the nation’s leading providers of multifamily housing loans, announced the closing of a $2.43 million loan refinancing for Heritage Court Apartments, a 149-unit subsidized apartment complex for seniors and handicapped persons in Spartanburg, South Carolina.
William E. Jones Jr., first vice president and senior loan originator in Love Funding’s New York office, secured the loan through the U.S. Department of Housing and Urban Development’s 223(a)(7) loan program. By utilizing HUD financing, Jones enabled the property’s owner to move from a 6.35 percent interest rate to a 3.9 percent fixed rate with a 26-year term, improving their cash flow by more than $30,000 a year.
In 2009, HUD’s Office of Affordable Housing Preservation (OAHP) began allowing multifamily property owners in its mark-to-market mortgage insurance program to re-subordinate additional debt owed on their properties when refinancing, rather than force them to pay off the balances. The move has allowed owners of older low-income properties to refinance at today’s lower rates, though many have yet to take advantage of the rule change.
“There are a lot of borrowers out there who for one reason or another think that refinancing isn’t an option for them,” Jones said. “But OAHP has proven that it’s willing to work with borrowers and make exceptions to improve the economics of these properties so they can help preserve affordable housing options.”
Heritage Court Apartments was built in 1985 for seniors, handicapped and disabled adults, and it was subsequently rehabilitated in 2006 through the market-to-market restructuring program. The program was designed to reduce federal spending on housing subsidies by making it financially feasible for multifamily properties to reduce rents to match comparable market rents in the surrounding area.