Industry News

CARMEL, IN (Dec. 27, 2018) – Mortgage banking firm Merchants Capital has secured financing for the development of a $19.7 million mixed-income workforce housing community in Rochester, Minnesota. Merchants Capital secured the loan through the first-ever Freddie Mac Non-LIHTC Forward Commitment on behalf of Real Estate Equities. Dubbed Technology Park Apartments, the 164-unit affordable housing complex will help to ease the city’s affordable housing crisis, as Rochester was recently ranked one of the lowest metropolitan statistical areas (MSAs) nationally for housing affordability by Nationwide Economics. The project closed on Sept. 5, 2018. “We appreciate the opportunity to assist in the development of this housing community and the chance to help close Rochester’s affordable housing gap,” said Michael R. Dury, president of Merchants Capital. “We were able to simplify the process with our ability to provide the construction financing through our parent company, Merchants Bank, and also offer the Freddie Mac Non-LIHTC Forward Commitment product for the long term permanent financing.” The apartments were financed through a 10-year Freddie Mac Non-LIHTC Forward Commitment loan where the interest rate was locked at the closing of the construction loan. Non-LIHTC forwards are unfunded, forward commitments for affordable housing developed by nonprofits and subsidized, rent-restricted affordable housing that for-profit developers can use for their new multifamily construction or substantial rehabilitation projects. “We are very excited to be on the forefront of developing a modern workforce housing product that is not heavily reliant on government funding sources,” said Alexander Bisanz, director of acquisitions at Real Estate Equities. “Partnering with the Greater Minnesota Housing Fund to provide low-cost, mission-driven equity – as well as structuring attractive financing with Merchants Capital – truly allowed us to get this project off the ground.” Forty percent of Technology Park Apartments will be priced affordably for individuals earning an annual income of $40,000, or 60 percent of the area’s annual median income (AMI). The Greater Minnesota Housing Fund contributed a total of $3.4 million in capital for the development of these units, which will cost renters an estimated $1,150 a month for a two-bedroom apartment. An additional 35 percent of units will be set aside for individuals earning about $55,000 a year, 20 percent below Rochester’s AMI. The remaining units will be priced slightly below the current market value, about $200-300 less than similar apartments in the area. “In all of Greater Minnesota Housing Fund’s work to create and preserve unsubsidized affordable housing, we have struggled to crack the code on the production of new affordable units without reliance on public resources. Now, as an equity partner in Technology Park, we are furthering our mission and innovating ways to increase the funding pie with new financing solutions,” said Rachel Robinson, fund manager with Greater Minnesota Housing Fund. “Going forward, Tech Park, with 164 modestly priced apartments, 66 at reduced, affordable rents, will be a pilot for further innovation in this realm.” Technology Park’s cost-efficient, smart building design achieves sufficient economies of scale to charge modest rents, meeting the needs of a range of household incomes. Today’s market financing tools are working best for luxury apartment construction, and at the other end of the spectrum, affordable apartment developments financed with federal tax credits are limited in supply. Developers have struggled to find ways to finance new construction homes that are in between: achieving modest rents for residents without government subsidy. Freddie Mac’s new Non-LIHTC Forward Commitment achieves this. “Freddie Mac’s forward commitment is helping to provide affordable housing for valued members of the Rochester, Minnesota, community who struggle to find it,” said David Leopold, vice president of targeted affordable sales & investments at Freddie Mac Multifamily. “We created Non-LIHTC Forwards for this very purpose – to provide the flexibility and certainty mission-driven investors need to finance housing for low- and very-low income families.” Technology Park Apartments will be located in Rochester, Minnesota, on the north side of Technology Drive Northwest between Valleyhigh Drive and West Circle Drive. Neighboring Benchmark Electronics to the east, Costco to the south and Crooked Pint to the west, the complex is positioned in close proximity to grocery stores and other nearby amenities.

Although national homeownership increased for the first time in 13 years, investors are still expecting inflated demand for apartment living due to a shift in demographic trends boosting the multifamily housing market. Many would assume millennials are driving the preference for renting – and while there are generational differences in who is buying versus renting – members of every generation are looking at renting as a lifestyle choice due to its inherent flexibility. The long-term outlook for multifamily construction is positive, showing that the preferences of aging baby boomers and millennials alike are causing an associated shift in demand from single-family to multifamily housing living options. By the end of the decade, multifamily construction is expected to peak nearly two-thirds higher than its highest annual level during the 1990s and 2000s. For both ends of the age spectrum, the demand for flexibility, amenities and a close connection to the city are driving a real estate race among developers for the next generation apartment living. Selling – or never buying – the white picket fence Baby boomers’ housing preferences are disrupting multifamily, as this generation is selling their big suburban homes and instead turning key on maintenance-free living, according to CNBC reporting. The American population over age 65 will increase to 21 percent from 13.7 percent by 2050 and are the fast-growing group of renters, especially in the senior and healthcare living spaces. Developers should recognize the key influence of this generation on multifamily housing trends, compared to millennials who prefer renting for a variety of reasons, including personal preference and economic disadvantage. The homeownership rate for millennials, the largest generation in U.S. history, is lower than that of their parents and grandparents due to high levels of student loan debt. In fact, for every 10 percent in student loan debt a person holds, their chance of home ownership drops 1 to 2 percent during their first five years after school, according a study by the Federal Reserve. These factors compound and should matter to developers, as every one percent drop in the home ownership rate creates a need for one million new rental units. Upgrading with amenities According to reporting by the Chicago Tribune, baby boomers are opting to sell their sprawling suburban homes when they become empty nesters and live in rental buildings with full amenities to avoid tasks like lawn mowing, shoveling, mortgages and property taxes. The latest data in the “amenities war” shows a demand for health and wellness amenities (including anything serving seniors) and the latest in smart home technology (a feature often wanted by young renters), according to the 2017 Multifamily Design+Construction Amenities Study. Popular examples of this new class of amenities include dog walking trails, art parks, outdoor fitness areas, coworking spaces, free building-wide WiFi and a community fitness, pilates and yoga studio. Connecting to the city “Live, work, play” has become a mantra for urban living and multifamily development. Renters at both ends of the age spectrum are being compelled to select the lifestyle- and leisure-oriented amenities available in cities. For baby boomers, connected cities with a variety of amenities also satisfy a desire for sociability, whether they’ve lost a spouse, just have an empty nest or have family living far away. Increasingly, millennials are highly educated workers with college degrees who work in computer science, information technology, media, finance, design, healthcare and a host of other industries who spend more of their lives without children due to delayed marriage. Those same young people tend to disproportionately locate and rent in central cities that have cosmopolitan, urban amenities. For seniors and young people alike, access to multiple forms of transit is another in-demand amenity often exclusively available in connected cities. Providing tenants and condo owners with the means to achieve greater mobility, such as bicycle storage and mass transit access, should be a top priority for developers in urban areas, according to the same Multifamily Design+Construction Amenities Study. The changing face of the American population, due in part to the preferences and generational differences between millennials and baby boomers, is driving a new class of multifamily housing. Are you ready to finance a project in this new multifamily landscape? Contact a Merchants Capital originator at originations@merchantscapital.com today.

A Letter from President Michael Dury We are excited to share the launch of our new name and brand: Merchants Capital. In 1990, we opened our doors as PR Mortgage & Investments, a mortgage banking firm specializing in multifamily housing and health care facility finance. Today, we are recognized as a premier provider and servicer of multifamily, senior and student housing. It’s important to pause and consider what else has changed over the past 28 years. Our parent company, Merchants Bank, reintroduced the trusted “Merchants” brand back into the financial services market in 2009, and Merchants continues to be recognized as one of the top performing banks nationally by S&P Market Intelligence. Additionally, in 2017, we acquired RICHMAC Funding, a national Freddie Mac Targeted Affordable Housing Seller/Servicer and Fannie Mae Multifamily Affordable Housing Lender. As our company continues to grow and evolve, we decided it was time for an exciting change. Our Merchants Capital rebrand reflects our investment in remaining the most innovative, trusted and complete financial solutions company in the industry by aligning our corporate entities with the “Merchants” name. You may be asking, “What does this change mean for my business?” Changing our name and branding to Merchants Capital does not change our commitment to providing you with the best selection of financial services. We will continue to offer all existing financial services, while investing further in brand unity and expert support for our clients. Merchants Capital and our affiliates will remain leaders in multifamily affordable housing finance, offering a full suite of products to affordable multifamily owners, including balance sheet, FHA, Fannie Mae and Freddie Mac. To our clients, employees, community and industry partners: Thank you. Thank you for growing with us and for your continued support and loyalty. We look forward to sharing this next chapter with you. Sincerely, Michael R. Dury, President

Carmel, INDIANA (07/12/2018) – Mathew M. Wambua, President of RICHMAC Funding LLC (“RICHMAC Funding”), a wholly owned subsidiary of PR Mortgage & Investment Corp. (“PR Mortgage”), has been elected to the Board of Trustees of The Metropolitan Museum of Art representing the borough of the Bronx. Mr. Wambua currently serves as president of RICHMAC Funding, where he is responsible for establishing and expanding the RICHMAC Funding multifamily lending platform.  He is a former Commissioner of the New York City Department of Housing Preservation and Development (HPD), the nation’s largest municipal housing agency. He has also served as Executive Vice President of the New York City Housing Development Corporation (NYC HDC).  From 2004 through 2008, Mr. Wambua held the position of Senior Policy Advisor for then-New York City Deputy Mayor for Economic Development.  Mr. Wambua coordinated and oversaw a citywide portfolio of economic development agencies, boards, and commissions.  His portfolio also included oversight of all economic development initiatives within the Bronx and upper Manhattan, including large-scale urban planning initiatives and significant public-private commercial real estate development projects. Previously, he was the Vice President for Special Projects at the New York City Economic Development Corporation (EDC) and a Senior Investment Officer for General Electric Capital Commercial Real Estate. “Our company is very proud of Mr. Wambua’s achievements, and also his continued commitment to the advancement of affordable housing and strong community involvement.  This election is extremely important to us as it speaks to the strength and excellence Mr. Wambua brings to our organization, leading the charge into new business opportunities and markets,” says Michael Dury, President of PR Mortgage. Mr. Wambua earned a B.A. from the University of California at Berkeley and a master’s degree in Public Policy from Harvard University’s John F. Kennedy School of Government.  Mr. Wambua has taught real estate finance at New York University’s Graduate School of Public Service, as well as managerial economics at the New School University’s Graduate school of Public Policy. “PR Mortgage, parent company of RICHMAC Funding, is recognized as a premier provider of multifamily, senior, and student housing throughout the country, and I am honored to serve the company and our mission,” said Wambua. “I have the privilege of working each day with some of the best housing professionals in the industry.”

Carmel, INDIANA (05/18/2018) – Carmel, Indiana based PR Mortgage & Investments (PR) is pleased to announce their selection of SS&C Precision LM to support loan servicing and origination for HUD/Ginnie Mae, Fannie Mae, Freddie Mac and its banking programs. SS&C Precision LM will also enhance PR’s asset management and investor reporting, and provide secure web-based portals for borrower self-service and document workflow automation.  PR’s top priority was to find a fully integrated, highly automated loan origination and servicing platform. SS&C Precision LM’s cloud platform offered the flexibility to support PR’s complex loan products including construction, participations, bridge and adjustable rate loans. “SS&C effectively demonstrated its ability to be a strategic partner for PR Mortgage and brings the industry talent and technology expertise we need to transform our agency and FHA lending operations.  SS&C has an impressive track record and a knowledgeable team to implement best practices based on their recent experience onboarding JLL,” said Michael Dury, President & COO of PR Mortgage & Investments. PR Mortgage & Investments is a wholly owned subsidiary of Merchants Bank of Indiana, specializing in multifamily housing and health care facilities finance.  Merchants Bank of Indiana’s holding company, Merchants Bancorp (Nasdaq: MBIN), is a diversified bank holding company headquartered in Carmel, Indiana operating multiple lines of business with a focus on Federal Housing Administration ("FHA") multifamily housing and healthcare facility financing and servicing, mortgage warehouse financing, retail and correspondent residential mortgage banking, agricultural lending and traditional community banking.  Merchants Bancorp conducts its business through its direct and indirect subsidiaries, Merchants Bank of Indiana, P/R Mortgage and Investment Corp., RICHMAC Funding LLC and Merchants Mortgage, a division of Merchants Bank of Indiana.  PR Mortgage is a premier provider and servicer of multifamily, senior, and student housing. SS&C Technologies is a global provider of investment and financial software-enabled services and software for the global financial services industry. Founded in 1986, SS&C is headquartered in Windsor, Connecticut and has offices around the world. Some 11,000 financial services organizations, from the world’s largest institutions to local firms, manage and account for their investments using SS&C’s products and services.

Carmel, INDIANA (1/18/2017) – PR Mortgage & Investments (PR) is proud to announce record results for 2016.  The company finished the year with more than $1.17 billion in mortgage originations, the second highest in the company’s 26 year history, 20,931 total housing units, and 152 total loans. The key highlights of these record performance numbers consisted of Affordable Housing Financings at 30% of total volume, the highest in company history.  Loan volume for 221(d)4 financings exceeded $161 million with 1,957 total housing units.  Also, more than $505 million in loans, 43% of total volume, were closed using Merchants Bank of Indiana, the parent company of PR Mortgage & Investments. PR Mortgage’s servicing portfolio volume also hit record performance numbers in 2016 with 944 active loans exceeding $6 billion, the highest in company history. “We at PR Mortgage are very proud of our accomplishments in 2016 and share in our success with our customers and banking partners. Utilizing Merchants Bank of Indiana in conjunction with FHA and the GSE’s have given us a competitive advantage and provides very competitive financing options for our clients. With the continued growth of the bank and competitive GNMA pricing, we expect momentum to continue in 2017,” said Mike Dury, COO of PR Mortgage & Investments. PR Mortgage & Investments is headquartered in Carmel, Indiana. PR is an approved FHA Mortgagee and is an approved Multifamily Accelerated Processing (MAP) lender for HUD.  PR Mortgage is also a Rural Housing Service (RHS) approved lender for the Section 538 program.  The company is a Government National Mortgage Association (GNMA) Issuer of Mortgage Backed Securities (MBS).  These agencies offer secondary market programs that provide a full range of loan structures for multifamily rental projects and health care facilities. Through these programs, PR Mortgage & Investments can provide acquisition, refinance, rehabilitation, and new construction loans.  These programs offer competitive long-term, fixed-rate loans that meet the needs of our clients.  Through its parent company (Merchants Bank of Indiana), PR Mortgage offers floating and fixed rate interim construction and acquisition/rehab loans.

HUD ISSUES NOTICE H 2016-15:  PROCESSING GUIDE FOR PREVIOUS PARTICIPATION REVIEWS OF PROSPECTIVE MULTIFAMILY HOUSING AND HEALTHCARE PROGRAMS' PARTICIPANTS - EFFECTIVE NOVEMBER 14, 2016 Issued on October 20, 2016, the guide defines Controlling Participants for previous participation review, new flag approval, and rejection guidance and flag protocols in federal programs of certain participants seeking to take part in multifamily housing and health programs administered by HUD’s Office of Housing.  The guide aids in clarifying and simplifying the process by which HUD reviews previous participation of participants that have decision making authority over their projects as one component of HUD’s responsibility to access financial and operational risk to projects in these programs. To download a summary of the Processing Guide changes, click here. To download a copy of the full Processing Guide, click here. PR Processing Staff is up-to-date on the changes that will affect your 2530 submissions.  Look for further instructions when loan documents are requested by your Loan Processor.

HUD has published its revised Multifamily Accelerated Processing (MAP) Guide, which is intended to cut the time required to approve loan applications and to assure consistent application of program requirements and credit standards across all HUD processing offices. To read the details of the published revisions, click here.  If you have any questions on how these changes affect your loan, please contact your loan originator at 317-569-7420 or at originations@prmic.com.

January 28, 2016 - The Federal Housing Administration (FHA) has announced a multifamily insurance rate reduction designed to encourage capital financing of affordable and energy-efficient apartments. Lower rates are expected to stimulate production and rehabilitation of affordable rental housing and help increase the amount of quality rental housing across the country. The press release from HUD Secretary Castro states, "The rate reductions will take effect on April 1, 2016, and will directly impact FHA’s Multifamily Housing Programs and properties housing low- and moderate-income families and/or developments installing energy-efficient systems or building within federal energy guidelines." This announcement is a positive change for affordable housing programs. To read the press release announcement and details on FHA's new Multifamily Insurance Rates, click here.  If you have any questions, please contact one our loan originators at 317-569-7420 or at originations@prmic.com.

Carmel, INDIANA (1/15/2016) – PR Mortgage & Investments (PR) is proud to announce record results for 2015.  The company finished the year with more than $1.15 billion in mortgage originations, the second highest in the company’s 25 year history. The key highlights of these record performance numbers consisted of more than $416 million in Affordable Housing Financings, the highest in company history, 21,423 total housing units, and 151 total loans.  More than $340 million in loans were closed using Merchants Bank of Indiana, the parent company of PR Mortgage & Investments. “We at PR Mortgage are very proud of our accomplishments in 2015 and share in our success with our customers and banking partners. Utilizing Merchants Bank of Indiana in conjunction with FHA has given us a competitive advantage and provides one of the best financing vehicles for our clients. With the continued growth of the bank and the launch of FHA’s new Small Balance Risk Sharing Program, we expect momentum to continue in 2016,” said Mike Dury, COO of PR Mortgage & Investments. PR Mortgage & Investments is headquartered in Carmel, Indiana. PR is an approved FHA Mortgagee and is an approved Multifamily Accelerated Processing (MAP) lender for HUD.  PR Mortgage is also a Rural Housing Service (RHS) approved lender for the Section 538 program.  The company is a Government National Mortgage Association (GNMA) Issuer of Mortgage Backed Securities (MBS).  These agencies offer secondary market programs that provide a full range of loan structures for multifamily rental projects and health care facilities. Through these programs, PR Mortgage & Investments can provide acquisition, refinance, rehabilitation, and new construction loans.  These programs offer competitive long-term, fixed-rate loans that meet the needs of our clients.  Through its parent company (Merchants Bank of Indiana), PR Mortgage offers floating and fixed rate interim construction and acquisition/rehab loans.