Rose Community Capital has launched an unfunded forward permanent loan program for affordable housing developments receiving new low-income housing tax credit (LIHTC) awards.
The program aims to provide developers with a flexible, long-term permanent loan solution that compliments the LIHTC program and supports the timely delivery of affordable housing, according to the firm.
This financing is available to newly constructed and sustainably rehabilitated LIHTC communities, typically with 40 or more units, and features flexible loan terms of 15 to 30 years with extended amortization periods. Designed for execution speed and certainty, the program seeks to close within 75 to 90 days from application and offers interest rate certainty through an early-rate lock option available prior to full loan commitment.
"Communities across the country are grappling with a persistent shortage of affordable housing, and financing certainty is often what determines whether or not a project moves forward,” says Alex Holverson, managing director of Rose Community Capital. “This program is structured to give developers greater confidence and momentum as they bring new LIHTC-financed communities to market, while reinforcing our commitment to housing that is safe, sustainable, and accessible to households across a range of income levels.”
An unfunded forward permanent loan involves a lender committing to provide a permanent mortgage at a future date upon project completion. It essentially provides developers with a pre-underwritten permanent loan that’s been sized and in place prior to closing on construction financing, according to Holverson.
It’s often helpful for affordable housing because LIHTC investors often want to know what the permanent loan amount is going to be before they close on construction and put equity into a deal.
Rose Community Capital has deals in the pipeline and is looking to close its first loans under the new program, he says, noting that the firm has a national reach.
The launch comes as the LIHTC program enters a period of significant expansion. Recent federal legislation permanently increased annual LIHTC allocations by 12% and lowered the bond financing threshold for a number of LIHTC projects beginning this year—changes that could support the development of more than 1.2 million additional affordable rental homes over the next decade.
“With the expansion, more capital is needed to come into the market, and this is another way for us to bring that capital into affordable housing,” Holverson says.
Part of the Jonathan Rose Cos., the firm focuses on the origination, underwriting, and placement of Federal Housing Administration-insured multifamily mortgages.