WASHINGTON, DC—After a somewhat slow start, more deals are starting to be executed under a tax-exempt loan program for affordable housing development that Freddie Mac launched last year.

Bethesda, MD-based Walker & Dunlop recently closed three loans totaling $10.6 million for properties in Tennessee with private real estate investment firm Freeman Webb, based in Nashville, TN, using the program.

Keith Melton, David Strange and Frank Baldasare led the Walker & Dunlop team in the transaction. The portfolio included three properties with loans structured as 16-year terms, with 35-year amortization schedules, with minimum debt coverage ratio of 1.15x, and an average loan to value of 90%.

These transactions follow the first one completed under the program in September 2014. W&D also did that transaction: it was a $14,280,000 loan for The Lakewood, an affordable, senior housing community in Dayton, OH, for Millennia Housing Development.

Baldasare originated and structured the rehab loan as well.

The program is living up to its promise of eliminating costs and requiring less documentation because it is a tax-exempt loan, not a bond, he tells GlobeSt.com. “It is a more efficient execution.”

The program is now gaining momentum, he adds, especially as it has become possible to use it for new construction as well and properties that are not stabilized.

“My understanding is that Freddie Mac has a lot of these deals in the pipeline,” he says. W&D does as well, Baldasare adds.

The program is a variation on the 4% Low-Income Housing Tax Credit execution — minus the high costs and fees that typically accompany these structures.

This is roughly how it works: a Freddie Mac Targeted Affordable Housing seller or servicer, typically a lender, makes a direct loan to a government entity such as a city, county or state housing authority in exchange for a tax-exempt note.

Freddie Mac then purchases the tax-exempt loan from the seller. The city, county or state housing authority that issued the note lends the loan proceeds to a borrower to finance a multifamily housing community that has affordable rents.

Because it is a direct placement with Freddie Mac, instead of the purchase of credit-enhanced bonds, it is less costly and more efficient.