| (a) Loan Structures. Loan structures must meet the
criteria described in this section and as further described in a NOFA.
The interest rate, amortization period, ad term for the loan will
be approved by the Board at the time of award, and can only be amended
prior to loan closing by the process in 10 TAC §13.12 (relating
to Pre-Closing Amendments to Direct Loan Terms).
(b) Criteria for Construction-to-Permanent Loans. Direct
Loans awarded through the Department must adhere to the criteria as
identified in paragraphs (1) - (7) of this subsection if being requested
as construction-to-permanent loans, for which the interest rate will
be specified in the NOFA and approved by the Board:
(1) The construction term for MFDL loans shall generally
be coterminous with any superior construction loan(s), but no greater
than 36 months. In the event the MFDL loan is the only loan with a
construction term or is the superior construction loan, the construction
term may be up to 36 months. Shorter timeframes may be required to
meet federal project completion or expenditure deadlines;
(2) No interest will accrue during the construction
term;
(3) The loan term shall be no less than 15 years and
no greater than 40 years, and the amortization period shall be between
30 to 40 years. The Department's loan must mature at the same time
or within six months of the shortest term of any senior debt, so long
as neither exceeds 40 years. The loan term commences following the
end of the construction term;
(4) Loans shall be secured with a deed of trust with
a permanent lien position that is superior to any other sources for
financing including hard repayment debt that is in an amount less
than or equal to the Direct Loan amount and superior to any other
sources that have soft repayment structures, non-amortizing notes,
have deferred forgivable provisions, or in which the lender has an
identity of interest with any member of the Development Team. Parity
liens may only be considered with federal loan funds from USDA Rural
Development;
(5) In general, up to 50% of the MFDL loan may be advanced
at loan closing, should there be sufficient eligible costs to reimburse
that amount; however, this amount may be proportionally exceeded for
a Development being awarded additional MFDL funds, if the Development
is past 50% at loan closing, so long as the required Mid-Construction
Inspection has been completed. In all cases, at least 10% of the funds
will be reserved for the final Draw.
(c) Criteria for Construction Only Loans. MFDL Loans
through the Department must adhere to the following criteria as identified
in this paragraph, if being requested as construction only loans.
The term of the construction loan shall generally be coterminous with
any superior construction loan(s), but no greater than 36 months.
In the event that the MFDL loan is the only construction loan or is
the superior construction loan, the term may not exceed 36 months.
Shorter timeframes may be required to meet federal project completion
or expenditure deadlines.
(d) Criteria for Permanent Refinance Loans. If 90%
of the Department's loan will repay existing debt, the first payment
will be due the month after the month of loan closing; 90% of the
loan may be advanced at loan closing, unless the Board approves another
date.
(e) Evaluations. All Direct Loan Applicants in which
third-party financing entities are part of the sources of funding
must include a pro forma and lender approval letter evidencing review
of the Development and the Principals, as described in 10 TAC §11.9(f)(1)
of this title (relating to Competitive HTC Selection Criteria). Where
no third-party financing exists, the Department reserves the right
to procure a third-party evaluation which will be required to be prepaid
by the Applicant.
(f) Pass-Through Loans. Department funds may not be
used as pass-through financing. The Department's Borrower must be
the Development Owner.
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