Get Project Mortgage Insurance Terms Sheets and Applications

MIF's project mortgage insurance is available for multifamily rental and underlying cooperative mortgage loans. Our insurance has the following features:

• Top loss coverage up to 100% on mortgage loans made by public entities including public employees pension funds, up to 75% on loans made by commercial lenders.

• Insurance takes effect when the project is occupied and has achieved a minimum rental income level.

• Provides current payment of principal and interest on public entity loans and final payment of principal and interest subsequent to foreclosure on loans by commercial lenders.

In general, MIF's underwriting criteria include:

• Up to the lesser of 80% loan-to-value or 90% loan-to-cost.

• Minimum income to total expense (including debt service) ratio of 1.05 to 1.00 for rental projects and 1.00 to 1 for cooperatives assuming at least a 5% vacancy rate.

• Rehabilitation loans for multifamily rentals must use at least 20% of the loan amount for rehabilitation. Refinance loans are permitted for underlying cooperative loans only.

Multi-family Housing Mortgage Insurance Criteria

Eligibility:

Eligible Lenders

Financial institutions as defined under the Public Authorities Law section 2426 including banks, trust companies, savings banks, savings and loan associations, credit unions, insurance companies, pension funds, certain subsidiaries of the above and certain New York State public benefit corporations such as the New York State Housing Finance Agency, the New York State Dormitory Authority, the New York City Housing Development Corporation and local industrial development authorities ("IDAs") (together the "Lender").

New Lenders must submit an "Approval of Mortgagee Application" and receive State of New York Mortgage Agency Mortgage Insurance Fund ("SONYMA MIF") approval before submitting an application for mortgage insurance.

The SONYMA MIF may require Lenders that do not have experienced loan underwriting staff to retain an independent financial consultant approved by the SONYMA MIF to prepare the application for SONYMA MIF insurance. The independent financial consultant would be retained at the Lender's expense.

The SONYMA MIF also reserves the right to approve the mortgage loan servicers for such Lenders, as well as any other third party contractors, including but not limited to appraisers, engineers, environmental or market consultants.

Eligible Properties

• New construction, moderate or substantial rehabilitation of multi-family properties
• Properties with occupancy restricted to seniors are subject to separate guidelines.

Eligible Borrower

Single asset entities including general or limited partnerships, corporations, trusts, joint ventures, limited liability companies and 501(c)(3) corporations.

The development team for the project must have a demonstrated track record in successfully developing, marketing and management of the type of eligible project proposed or must form a joint venture with an entity which has such expertise.

Key principals with an ownership interest in excess of 25% in the project must demonstrate sufficient financial stability and liquidity to construct and operate the project.

Borrowers will be required to submit certified financial statements and any other documentation, as may be required by the SONYMA MIF.

Eligible Loans

First lien mortgage loans that provide permanent financing for eligible properties. Loans in excess of $20,000,000 will be considered on a case by case basis by SONYMA MIF.

A letter of credit acceptable to the SONYMA MIF in an amount equal to the construction loan is required through stabilized occupancy if the SONYMA MIF insures the construction loan. The SONYMA MIF does not assume construction or lease-up risk.

Rehabilitation Requirement

Loans for the acquisition or refinancing of an existing property must also include rehabilitation in an amount equal to 20% of the loan amount as determined by the SONYMA MIF.

Affordability Requirements

The SONYMA MIF insures projects that include:

1. affordable housing units;
2. are located in geographic areas that suffer from a disinvestment of mortgage capital; or
3. are located in economic development zones.

The SONYMA MIF also insures affordable, market-rate projects in all areas. Affordability is based on area median income and market rents.

Amount of Mortgage Insurance:

The SONYMA MIF provides mortgage insurance for the following percentage of a mortgage loan:

• Public Benefit Corporations- Up to 100% of the mortgage loan amount

• Public Pension Funds - Up to 100% of the mortgage loan amount

• Conventional Lenders - Up to 75% of the mortgage loan amount

Mortgage Loan Underwriting Criteria:

Loan Amount

The lesser of 80% loan-to-value or 90% loan-to-cost of the development based on a review by the SONYMA MIF. The loan amount is also subject to compliance with the income-to-expense ratio requirement.

Income to Expense Ratio

The SONYMA MIF income-to-expense ratio is calculated by dividing effective gross income by total projected operating expenses including debt service and annual fees.

The minimum income-to-expense ratio is 1.05 to 1.00.

Income to Expense Ratio for Mixed Use Projects

If retail income is less that 25% of total income, the required income to expense ratio is 1.05X which is our standard ratio for multifamily projects.

If retail income is between 25% and 49% of total income, the required income to expense ratio is 1.10X.

If retail income is 50% or more of total income, the required income to expense ratio is 1.15X which is our standard ratio for retail projects.

The assumed vacancy rate for retail space should be the greater of 10% or market in all cases.

Loan Terms

Maximum loan term of 30 years. Loans must be self-amortizing. The loan may be structured with a balloon payment. The balloon payment will not be insured by the SONYMA MIF. Debt service should be accelerated to take into account the expiration of any real estate tax abatement or exemption.

Subordinate Financing

Subordinate mortgages are permitted with SONYMA MIF approval. Such loans must be fully subordinated in terms of collateral and remedies and subject to a subordination agreement approved by SONYMA MIF. Debt service on such loans will be included in the income to expense ratio.

Equity Requirements

Minimum 10% cash equity from non-loan proceeds is required at closing.

Developer Fee

The maximum developer fee should not be more than 10% of the total adjusted development cost which is equal to the total development cost less the developer's fee. The developer fee may be subject to adjustment if there is an identity of interest between the developer and the general contractor. The timing of the payment of the developer fee may be subject to approval by the SONYMA MIF.
The developer fee cannot be included in the calculation of the 20% rehabilitation requirement.

Replacement Reserve Requirement

A minimum annual deposit to a reserve for replacement of 1.5% of effective gross income is required. For rehabilitated properties, a greater amount may be required based on a physical needs assessment. An up-front deposit to the replacement reserve may also be required for rehabilitated projects.

Operating Deficit Reserve

An operating deficit reserve may be required subject to terms and conditions as determined by the SONYMA MIF.

Third Party Reports

Lenders must provide the following independent third party reports from contractors acceptable to the SONYMA MIF:

1. an appraisal,
2. a Phase One environmental study,
3. a construction engineering review of plans, specifications, and the adequacy of the construction budget for the project.

Reports from a construction monitor acceptable to SONYMA MIF will be required to be submitted during the construction period. In addition to the appraisal report, a separate market analysis conducted by a professionally qualified practitioner, acceptable to the SONYMA MIF may also be required.

Conditions Precedent to Permanent Mortgage Insurance:

The following is a partial list of documentation in a form satisfactory to the SONYMA MIF which must be received prior to mortgage insurance being declared effective:

• A Final Certificate of Occupancy, Certification of Substantial Completion, or a Temporary Certificate of Occupancy combined with a pre-funded punch list of 150% of all costs required to complete the project.

• A Certification of SONYMA MIF's Rental Achievement Level, evidenced by executed rental contracts. The Rental Achievement Level means that the project has the applicable income-to expense ratio and is either fully rented or has achieved a 90% occupancy rate for a minimum of three consecutive months.

• Evidence that real estate tax abatements or exemptions, if any, are in place for the property.

• Evidence of compliance with zoning and all applicable building codes.

• Certification that there has been no adverse changes in the borrower's financial status.

• Development cost certification satisfactory to the SONYMA MIF.

• Satisfaction of any project-specific requirements contained in the SONYMA MIF.

• Commitment to Insure and the Certificate of Insurance Special Conditions.

SONYMA MIF Mortgage Insurance Costs and Fees:

Application Fee

0.10% of the insured loan amount.

Initial Premium

0.50% payable at closing. A 1% premium payable at closing will be required for a policy that is non-cancellable for two years in the event of non-payment of the annual mortgage insurance premium.

Annual Premiums

0.50% of the outstanding principal balance payable in advance.

Processing Fees

To be determined at the point of application by the SONYMA MIF. Processing fees may include, but not be limited to, the cost of third party reports commissioned by the SONYMA MIF and special counsel.

Application:

This term sheet is a summary and does not purport to be a complete description of SONYMA MIF's criteria for mortgage insurance. The criteria described herein are subject to change without notice.

For detailed information and application packages, please contact:

Michael Friedman
Senior Vice President/Director
SONYMA/MIF
641 Lexington Avenue
New York, New York 10022
Telephone: (212) 688-4000, ext. 700
Fax: (212) 872-0714

Alternative Housing for Seniors Mortgage Insurance Criteria

Eligibility

Eligible Lenders

Financial institutions as defined under the Public Authorities Law section 2426 including banks, trust companies, savings banks, savings and loan associations, credit unions, insurance companies, pension funds, certain subsidiaries of the above and certain New York State public benefit corporations such as the New York State Housing Finance Agency, the New York State Dormitory Authority, the New York City Housing Development Corporation and local industrial development authorities ("IDAs") (together the "Lender").

New Lenders must submit an "Approval of Mortgagee Application" and receive State of New York Mortgage Agency Mortgage Insurance Fund ("SONYMA MIF") approval before submitting an application for mortgage insurance.

The SONYMA MIF may require Lenders that do not have experienced loan underwriting staff to retain an independent financial consultant approved by the SONYMA MIF to prepare the application for SONYMA MIF insurance. The independent financial consultant would be retained at the Lender's expense.

The SONYMA MIF also reserves the right to approve the mortgage loan servicers for such Lenders, as well as any other third party contractors, including but not limited to appraisers, engineers, environmental or market consultants.

Eligible Properties

New construction, substantial rehabilitation, or acquisition/Moderate rehabilitation of properties to be developed into housing for seniors as listed below. Some projects may be a combination of the various types listed below. Such projects will be considered on a case by case basis.

• Independent Living - Unlicensed projects for seniors who require minimal assistance, generally providing limited communal dining.
• Assisted Living Projects, which provide three meals daily and extensive personal care services.
• Adult Homes - Projects similar to Assisted Living without individual kitchens.

Eligible Borrower

Single asset entities including general or limited partnerships, corporations, trusts, joint ventures, limited liability companies and 501 (c) (3) corporations.

The development team for the project must have a demonstrated track record in successfully developing, marketing and management of the type of eligible project proposed or must form a joint venture with an entity which has such expertise.

Key principals with an ownership interest in excess of 25% in the project must demonstrate sufficient financial stability and liquidity to construct and operate the project.

Borrowers will be required to submit certified financial statements and any other documentation, as may be required by the SONYMA MIF.

Eligible Loans

First lien mortgage loans that provide permanent financing for eligible properties. Loans in excess of $20,000,000 will be considered on a case by case basis by SONYMA MIF. The SONYMA MIF does not assume construction or lease-up risk.

Rehabilitation Requirement

Loans for the acquisition or refinancing of an existing property must also include rehabilitation in an amount equal to 20% of the loan amount as determined by the SONYMA MIF.

Affordability Requirements

The SONYMA MIF insures projects that include: i) below-market rate affordable housing units; ii) are located in geographic areas that suffer from a disinvestment of mortgage capital; or iii) are located in economic development zones. The SONYMA MIF also insures affordable market-rate projects in all areas. Affordability is based on area median income and market rents.

Amount of Mortgage Insurance

The SONYMA MIF provides mortgage insurance for the following percentage of a mortgage loan:

• Public Benefit Corporations - Up to 100% of the mortgage loan amount
• Public Pension Funds - Up to 100% of the mortgage loan amount
• Conventional Lenders - Up to 75% of the mortgage loan amount

Mortgage Loan Underwriting Criteria

Loan Amount

The lesser of 80% loan-to-value or 90% loan-to-cost of the development based on a review by the SONYMA MIF. The loan amount is also subject to compliance with the income-to-expense ratio requirement.

Income to Expense Ratio

The SONYMA MIF income-to-expense ratio is calculated by dividing effective gross income by total projected operating expenses including debt service and annual fees. The minimum income-to-expense ratio is 1.05 to 1.00.

Debt Service Ratio

The debt service ratio is calculated by dividing net operating income by debt service and annual fees including mortgage insurance premium. The minimum debt service ratio is 1.20 to 1.00.

Loan Terms

Maximum loan term of 30 years. Loans must be self-amortizing. Debt service should be accelerated to take into account the expiration of any real estate tax abatement or exemption.

Subordinate Financing

Subordinate mortgages are permitted with SONYMA MIF approval. Such loans must be fully subordinated in terms of collateral and remedies and subject to a subordination agreement approved by SONYMA MIF. Debt service on such loans will be included in the income to expense ratio.

Equity Requirements

10% cash equity from non-loan proceeds is required at closing.

Developer Fee

The maximum developer fee is 10% of the total adjusted development cost which is equal to the total development cost less the developer's fee. The developer fee will be subject to adjustment if there is an identity of interest between the developer and the general contractor. The timing of the payment of the developer fee will be subject to approval by the SONYMA MIF.

The developer fee cannot be included in the calculation of the 20% rehabilitation requirement.

Replacement Reserve

Requirement: A minimum annual deposit to a reserve for replacement of 1.5% of effective gross income is required. For rehabilitated properties, a greater amount may be required based on a physical needs assessment. An up-front deposit to the replacement reserve may also be required for rehabilitated projects.

Third Party Reports

Lenders must provide the following independent third party reports from contractors acceptable to the SONYMA MIF: 1) an appraisal, 2) a Phase One environmental study, 3) a construction engineering review of plans, specifications, and the adequacy of the construction budget for the project.

Required Submissions for Alternative Housing for Seniors

The following additional information must be included in the SONYMA MIF application package for Alternative Housing for Seniors:

• Service Plan
  A detailed service plan and description of the project providing information regarding any applicable licensing requirements, the level of services to be provided, the fee structure for such services, and the provider of such services must be submitted as a part of the SONYMA MIF mortgage insurance application.

• Market Analysis
  A market analysis report conducted by a professionally qualified practitioner, acceptable to the SONYMA MIF, specializing in market analysis and market positioning for senior housing, will be required as a part of the SONYMA MIF mortgage insurance application.

Conditions Precedent to Permanent Mortgage Insurance

The following is a partial list of documentation in a form satisfactory to the SONYMA MIF must be received prior to mortgage insurance being declared effective:

• A Final Certificate of Occupancy, Certification of Substantial Completion, or a Temporary Certificate of occupancy combined with a pre-funded punch list of 150% of all costs required to complete the project.

• A Certification of SONYMA MIF's Rental Achievement Level, evidenced by executed rental contracts. The Rental Achievement Level means that the project has sustained a 1.05 to 1.00 income-to-expense ratio, a 1.20 to 1.00 debt service ratio and a 90% occupancy rate for a minimum of three consecutive months.

• Evidence that real estate tax abatements or exemptions, if any, are in place for the property. Development cost certification satisfactory to the SONYMA MIF.

• Satisfaction of any project-specific requirements contained in the SONYMA MIF Commitment to Insure and the Certificate of Insurance Special Conditions.

SONYMA MIF Mortgage Insurance Costs and Fees

Application Fee

0.10% of the insured loan amount.

Initial Premium

0.50% payable at closing. A 1% premium payable at closing will be required for a policy that is non-cancellable for two years in the event of non-payment of the annual mortgage insurance premium.

Annual Premiums

0.50% of the outstanding principal balance payable in advance.

Processing Fees

To be determined at the point of application by the SONYMA MIF. Processing fees may include, but not be limited to, the cost of third party reports commissioned by the SONYMA MIF and special counsel.

Application

This term sheet is a summary and does not purport to be a complete description of SONYMA MIF's criteria for mortgage insurance. The criteria described herein are subject to change without notice.

For detailed information and application packages, please contact:

Michael Friedman
Senior Vice President/Director
SONYMA/MIF
641 Lexington Avenue
New York, New York 10022

Cooperative Housing Mortgage Insurance Criteria

Eligibility:

Eligible Lenders

Financial institutions as defined under the Public Authorities Law section 2426 including banks, trust companies, savings banks, savings and loan associations, pension funds and certain New York State public benefit corporations such as the New York State Housing Finance Agency and the New York City Housing Development Corporation (together the "Lender").

New Lenders must submit an "Approval of Mortgagee Application" and receive State of New York Mortgage Agency Mortgage Insurance Fund ("the MIF") approval before submitting an application for mortgage insurance.

The MIF also reserves the right to approve the mortgage loan servicers for such Lenders, as well as any other third party contractors, including but not limited to appraisers, engineers, environmental or market consultants.

Eligible Projects

New construction, rehabilitation or refinance of cooperative properties. For existing properties, at least 40% of the units shall have been sold (i.e., no longer held by the sponsor) and at least 75% of sold units shall be owner-occupied. The latter may be waived by the MIF in extenuating circumstances. Projects with less than ten units will be considered on a case-by-case basis.

Eligible Borrower

The cooperative board members must have a demonstrated track record in successfully managing the property or must hire a real estate management firm with experience in managing cooperative properties.

Borrowers will be required to submit:

1. the Offering Plan and all amendments;
2. audited financial statements for the preceding three fiscal years and any other documentation as may be required by the MIF.

The MIF will carefully review the financial statements and record of an existing sponsor, if any, and its role in the operation of the property. The MIF discourages the sponsor's control of the cooperative's Board.

Eligible Loans

First lien mortgage loans that provide permanent financing for eligible properties. Loans in excess of $20,000,000 will be considered on a case-by-case basis.

Rehabilitation Requirement

Twenty percent (20%) of the insured loan amount must cover the cost of new construction or rehabilitation as determined by the MIF.

Refinance Requirement

Cooperatives that were established on or before June 15, 1994 may refinance their loans and are exempt from the aforementioned rehabilitation requirement. However, such financing should not otherwise be available and such financing should promote or accommodate the sale of shares for individual units, thereby facilitating home ownership opportunities. Evidence of recent unit sales within  the project may be also required.

Affordability Requirement

The MIF insures loans for affordable cooperative projects located in all areas. Affordability is based on area median income and maintenance charges.

Amount of Mortgage Insurance:

Insurance Coverage

Insurance coverage for a refinance loan is up to 50% of the loan amount. The following is the percentage insurance coverage for lenders of a rehabilitation loan:

• Public Benefit Corporations - Up to 100% of the loan amount
• Public Pension Funds - Up to 100% of the loan amount
• Conventional Lenders - Up to 75% of the loan amount

Mortgage Loan Underwriting Criteria:

Loan Amount

For conventional cooperative projects, the maximum loan to value is 60%. In addition, the average pro rata share of the underlying mortgage per individual unit should not exceed 67% of the selling price per unit.

For limited equity cooperative projects having no share / end loans, the maximum loan to value ratio shall be determined on a case-by-case basis. The loan amount is also subject to the income to expense ratio requirement set forth below.

Income to Expense Ratio

The MIF-required income-to-expense ratio is calculated by dividing effective gross income by total projected operating expenses, including debt service and mortgage insurance premium.

The minimum income to expense ratio 1.00:1.00. However, the MIF reserves the right to underwrite a project at a 1.05:1.00 when a high percentage of units are sublet to renters.

No vacancy and / or collection loss is required for sold units. A 5% vacancy and / or collection loss is required for sublet and unsold units. The vacancy and / or collection loss for non-residential income is the greater of 10% or market.

Loan Terms

The maximum loan term is 30 years. Loans must also be self-amortizing. The loan may be structured with a balloon payment; however, the balloon payment will not be insured by the MIF.

Debt service should be accelerated to take into account the expiration of any real estate tax abatement or exemption.

Subordinate Financing Subordinate mortgages are permitted; however, such loans must be fully subordinated in terms of collateral and remedies and subject to a subordination agreement approved by the MIF. Debt service on such loans will be included in the income to expense ratio unless it is based on cash flow.

Equity Requirement

There is no minimum cash equity requirement.

Developer Fee

Not permitted.

Building Reserve Requirement

A minimum annual deposit to a reserve for replacement of 1.5% of effective gross income is required. A greater amount may be required based on a physical needs assessment. An up-front deposit to the replacement reserve may also be required for projects needing rehabilitation work within a few years which is not covered by the insured loan.

Third Party Reports

Lenders must provide the following independent third party reports from contractors acceptable to the MIF:

1. an appraisal,
2. a Phase I environmental study,
3. a construction engineering review, including the adequacy of the construction budget for projects requiring rehabilitation.

Appraisal Report

Valuation shall be based on the project's Gross Sellout Value. For Projects having less than sixty percent of units sold, the appraisal report shall also include the following two income/expense valuation scenarios:

Income Approach to value based on current maintenance for sold units plus actual rents for unsold units and expenses as if rental property (i.e., maintenance and repairs for individual units factored in as landlord's responsibility).

Income Approach to value based on current market rents for sold units plus actual rents for unsold units and expenses as if rental property (i.e., maintenance and repairs for individual units factored in as landlord's responsibility).

Cooperative Share Loans

Cooperative properties where the MIF has insured the underlying mortgage loan are eligible for end loan mortgage insurance through MIF-approved, single-family lenders. Call Michael Esposito, Assistant Vice President and Chief underwriter of Single Family Mortgage Insurance, at (212) 688-4000, extension 707 for details.

Special Conditions

Maintenance decrease requires consent of the MIF.
Lender to receive collateral assignment of cooperative corporation-held shares (where not previously pledged).

Where aggregate rental income on sponsor-owned units is less than sponsor's aggregate maintenance obligation, the sponsor will be required to fund a gap escrow account in the amount of two times the annual shortfall. In addition, the lender may be required to receive collateral assignment of sponsor-held shares.

Conditions Precedent to Permanent Mortgage Insurance:

Required Documentation

The following is a partial list of documentation in a form satisfactory to the MIF which must be received prior to mortgage insurance being declared effective:

A Final Certificate of Occupancy or a Temporary Certificate of Occupancy and a Certificate of Substantial Completion for rehabilitation loans. Where rehabilitation is incomplete, a pre-funded punch list of 150% of all costs required to complete the project may be required.

A Certification of the MIF's Maintenance Achievement Level, evidenced by executed sales or contracts. The Maintenance Achievement Level means that the project has the applicable income-to expense ratio.

Evidence that real estate tax abatements or exemptions, if any, are in place for the property.

Evidence of compliance with zoning and all applicable building codes.

Certification that there has been no adverse changes in the borrower's financial status.

Satisfaction of any project-specific requirements contained in the MIF Commitment to Insure and the Certificate of Insurance

Special Conditions.

SONYMA MIF Mortgage Insurance Costs and Fees:

Application Fee

0.10% of the insured loan amount, but not less than $250.

Initial Premium

0.50% payable at closing.

Annual Premiums

0.50% of the outstanding principal balance payable in advance.

Processing Fees

None for a standard project. However, for a complex project, processing fees may be charged to include, but not be limited to, the cost of third party reports commissioned by the MIF and special counsel.

Application:

This term sheet is a summary and does not purport to be a complete description of the MIF's criteria for mortgage insurance. The criteria described herein are subject to change without notice.

For detailed information and application packages, please contact:

Sheldon Goldman
Vice President
SONYMA/MIF
641 Lexington Avenue
New York, New York 10022
Telephone: (212) 688-4000, ext. 706
Fax: (212) 872-0706