The Affordable Housing Investors Council (AHIC) has updated its guidance on sponsor and guarantor liquidity and net worth, replacing fixed-dollar minimum thresholds with a risk-calibrated underwriting framework.
The updated guidance covers equity commitment, sources and uses, balance sheet composition, contingent obligations, and REO portfolio performance.
AHIC previously recommended fixed-dollar minimums—$5 million net worth and $1 million liquidity—which became widely cited industry benchmarks.
A task force of credit officers spent the past year developing a framework that better reflects how underwriting actually works in practice.
The expanded Appendix II replaces the old pass/fail thresholds with a structured set of project-level and guarantor-level underwriting considerations, including equity commitment and timing, sources and uses, guarantor balance sheet composition, contingent obligations, and REO (real estate owned) portfolio performance. It also tightens the definition of liquid assets and retains the percentage-based construction liquidity benchmarks. The fixed-dollar net worth and liquidity minimums have been removed from both documents.
“This update reflects how our members actually approach guarantor analysis—not as a pass/fail test against a single number, but as a structured assessment of whether a sponsor can support a project through its full arc of risk,” said AHIC president Vihar Sheth.
AHIC characterized the announcement as an “interim step” as it has launched a comprehensive project to review and update its full 2018 Underwriting Guidance, with the liquidity and net worth update being released given the urgency identified by the underwriting committee.
The updated Appendix II and the revised 2018 Underwriting Guidance are available to AHIC members at www.ahic.org.