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March 15, 2021

Debt Service Reserve Update

Steve  Lansbury
Article By
Steve Lansbury, Senior Vice President

 

Last spring, we instituted Debt Service Reserves (DSRs) to address the uncertainties brought on by the pandemic. Now, with almost a year under our belt and an improving economic outlook, we are revising these requirements.

We’re maintaining DSRs for higher leverage transactions, but requirements for waiver eligibility and DSR sizing are now as outlined here.

This update is for Conventional and Targeted Affordable Housing business for which a DSR is required; no changes are yet planned for Small Balance Loans, Student or Seniors transactions. Supplementals will continue to be sized based on the combined debt service of all existing liens but are now also eligible for waivers and more favorable DSR sizing.

These changes will be effective for all loans currently in process that have not yet rate-locked. Going forward, we will continue to evaluate our DSR requirements.  

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