Freddie Mac Offers Cheap Mezz Loan In Exchange For Rent Caps

Freddie Mac headquarters

WASHINGTON, DC–Freddie Mac has launched a new mezzanine loan pilot for multifamily borrowers that provides favorable pricing and additional debt capital in exchange for keeping the majority of rents in the property at levels affordable to low- and moderate-income families.

The mezz loan provides the borrower an additional 10% of the loan amount for up to 90% LTV at a below-market interest rate. Currently mezz debt is pricing above 9% so the program will provide financing under that rate, according to Amanda Nunnink, senior director of Production and Sales at Freddie Mac Multifamily. The larger the loan — and hence the more units that will have fixed rents — the more aggressive the pricing will be, she said.