Notre Dame Apartments

closing a section 202 financing

Sims Mortgage Funding, Inc. (“SMF”), our FHA-insured lending subsidiary, closed a $6,286,200 refinancing loan for the Notre Dame Apartments, an existing 98-unit elderly Section 202 project in the Bronx, New York. The refinancing, insured by FHA under Section 223(f), was used to prepay Notre Dame's 9.375% existing loan. This transaction was one of the first Section 202 prepayments.

SMF funded the refinancing loan with taxable GNMA Securities at a 5.41% interest rate and a 35-year, fully-amortizing term. Debt service savings are estimated at $135,000 per year, which will be used to expand Notre Dame's social services programs, and to create new transportation, medical and nursing services. In addition, the prepayment released approximately $1 million in reserves from the existing loan.

Historically low interest rates and more flexible underwriting policies have made the use of FHA-insured loans an extremely attractive way to prepay high interest rate Section 202 Direct Loans.