Centerline Capital Group has become the first multifamily lender to achieve fully delegated status under Freddie Mac’s Delegated Underwriting for Targeted Affordable Housing program.
By going to fully delegated status, Centerline says it can shave about 30 days off the time it takes to process a typical affordable housing transaction. That would reduce the processing time from between 90 and 120 days to between 60 and 90 days.
Quicker execution is especially important in the lowincome housing tax credit world. “The allocation of tax credits and bonds are precious resources and in many places, there are ‘use it or lose it’ clauses,” said Rachel Diller, a director in the Commercial Real Estate Group of Centerline Capital Group. “For affordable housing developers, certainty is key.”
The quicker processing time may be even more critical since conduit lenders began scaling back their originations. “In today’s market, where Freddie Mac is inundated with loan requests due to the cooling off of the CMBS market, the transaction could be a much longer process,” said Diller.
Freddie Mac’s Delegated Underwriting program for affordable housing allows approved lenders to fully underwrite loans, expediting the processing time in exchange for sharing risk. But lenders must graduate to fully designated status after completing an initial trial period as a delegated underwriter.
Centerline has been part of the program since May 2005, soon after it began. Since entering the program, the company has closed 37 transactions, totaling more than $285 million in financing. The company currently has eight deals in its pipeline that are expected to close by year-end.
The first financing package that Centerline delivered under its fully delegated status was for the purchase and renovation of Villa Nueva Apartments in San Diego, and was made to affordable housing developer Steadfast Residential Properties. The company arranged a $37.5 million taxexempt bond financing package for Steadfast, and also served as a tax credit equity provider to complete a $63.7 million financing package for the 398-unit affordable housing complex.
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