Lead Paint Abatement (“LPA”) lending program for commercial mortgages
Purpose: to finance the costs of lead paint inspection, remediation and abatement in residential rental properties constructed prior to 1978, in order to achieve lead-safe status.
Background: Serious health risks associated with lead paint are widely recognized. In 2018, the State of New Hampshire adopted universal testing guidelines for all infants through the age of 2 years, and mandated requirements for the mitigation of lead paint hazards in rental apartments and child care facilities. MVSB wishes to contribute towards improving the health and safety of our customers and our communities by offering incentives to landlords to test for and remove lead paint hazards, even before such hazards might become identified through the State’s testing programs.
We have committed a pool of funds be used to actively promote a special commercial mortgage program for the remediation of lead paint hazards in pre-1978 apartment buildings. The program would feature a fixed rate and flexible payment terms to create an incentive for property owners by easing some of the financial burden of remediation.
LPA Program Outline: 1st and 2nd mortgage* loans (*2nd mortgage available if MVSB holds existing 1st mortgage).
Can be used as gap financing in conjunction with NHHFA grant funding or NH State loan program.
- Loan amounts up to 85% of current market value
- Terms of up to 25 years
- Up to 12 months of interest-only during improvement and re-leasing phase
- Fixed rate set 0.75% over our 30-year portfolio mortgage rate (currently equates to 4.125%)
- No appraisal fee for loans up to $500,000 (an appraisal will be required for loans over $500,000, at borrower cost)
- Bank origination fee $500. Outside closing costs would include title search, title insurance, recording fees and any transfer/settlement expenses
- Cash out must be used for subject property improvements
- Requires an approved plan to achieve lead-safe status, with work to be completed by licensed lead paint contractors
- Bank will escrow or hold back funds for remediation and abatement work; to be advanced with contractor invoices
- Properties previously certified as lead-safe are also program eligible, subject to bank review
*Final terms are subject to underwriting; other terms and conditions could apply
Process:
- Refer borrower to NHHFA to determine eligibility for grant or low cost State loan funding.
- If eligible, NHHFA can coordinate risk assessment and abatement plan; MVSB loan program can be used as additional gap funding to cover non-eligible unit renovations or costs in excess of grant funds.
- If not eligible through NHHFA, owner/borrower will be responsible for obtaining a lead paint assessment and an abatement/remediation plan from a state-licensed contractor.
- MVSB loan program can be used to cover up to 100% of the cost of abatement, provided LTV does not exceed LTV limits.
Benefits to Owners:
- Ensure health and safety of tenants
- Reduce exposure to a State issued lead paint remediation order
- Reduce exposure to potential tenant liability claims
- Increase value and marketability of property
- Take advantage of an opportunity to access long-term, low cost funds
