Pathway Lending, the Tennessee Bankers Association, and the Tennessee Housing Development Agency are working together to identify qualified developers, underwrite loan requests, and participate loans with Subscribing banks. These loans provide developers with a long-term, fixed rate, permanent mortgage for their Low-Income Housing Tax Credit awarded developments. These loans also play a major role in improving economic conditions, incomes, taxes, and jobs in low-income communities across Tennessee.

1. Loan Consortium
Developing Affordable Multi-Family Housing
Through Loan Participations

2. The Need for Affordable Housing
Loan Consortium: Affordable Multi-Family Housing
With a shortage of 100,000 affordable
rental housing units in Tennessee, The
Loan Consortium for Affordable MultiFamily Housing is an excellent example
of how partnerships can be forged to
achieve a common goal of providing safe,
decent & affordable housing.
Pathway Lending, the Tennessee Bankers
Association, and the Tennessee Housing
Development Agency are working
together to identify qualified developers,
underwrite loan requests, and participate
loans with Subscribing banks.
These loans provide developers with a
long-term, fixed rate, permanent
mortgage for their Low-Income Housing
Tax Credit awarded developments. These
loans also play a major role in improving
economic conditions, incomes, taxes, and
jobs in low-income communities across
Tennessee.

3. Loan Consortium: Affordable Multi-Family Housing
High-Performing
Since the inception of the Low-Income
Housing Tax Credit program in the 1986 tax
reform, approximately $100 billion has been
put to work in the development of more
than 2.5 million affordable housing units in
the United States.
More than 99% of Low-Income Housing
Tax Credit (LIHTC) projects have
performed without need for tax credit
recapture. The LIHTC program has proved
to be the most effective vehicle for raising
private-sector community investments.
The Consortium supports affordable multifamily housing in Tennessee by providing
permanent financing to developers for
projects including acquisition, construction,
rehabilitation, and refinancing of LIHTC
awarded developments.
This is a growing market with significant
loan participation opportunities. THDA
awards an average of $89 Million of LIHTCs
to developers annually through a
competitive application process.

4. Loan Consortium: Affordable Multi-Family Housing
Your Financial Institution’s Benefits:
Benefits to Subscribing Financial Institutions
 Excellent risk-adjusted returns
 Predictable 15-year benefit stream
 Regulatory (CRA) credit for
community development
 Lowest default rate of all real estaterelated asset classes
 High-impact socially responsible
investment
Why You Should Participate in the
Loan Consortium:
Pathway Lending’s Loan Consortium for
Affordable Multi-Family Housing is
attractive to Financial Institutions because
it offers the opportunity to view fully
underwritten credit write-ups and
participate in loans that help improve
earnings and maintain diversification.
The Consortium provides participating
Financial Institutions with a proven model
with historically low risk.
Financial Institutions can choose their
level of participation and purchase a
portion of the permanent financing, with a
minimum $200M commitment.

5. Loan Consortium: Affordable Multi-Family Housing
Membership
Financial Institutions that complete the
Subscription Agreement can review writeups and supporting documents via a secure
website and participate as they see fit.
Membership is quick & easy. Joining opens
you to all the benefits associated with CRA
lending with limited risk. There is a $1,000
annual membership fee that gets you access
to $10MM in high-quality deals annually.
The Loan Consortium identifies qualified
developers in need of long-term,
permanent financing. Pathway Lending
underwrites loans and provides full due
diligence and credit analysis.
Subscribing Banks can purchase a portion of
the permanent financing through a loan
participation structure, with a minimum
$200M commitment. Once the deal is fully
subscribed Pathway Lending will originate
the loan, execute Participation Agreements,
and service the loan.

6. Loan Consortium: Affordable Multi-Family Housing
The Low Income Housing Tax Credit
Program has been so effective in leveraging
private capital because it is a low-risk
investment opportunity that returns high
rewards for your institution.
Experienced developers with a strong trackrecord of success and significant monitoring
procedures in put place by tax syndicators
ensure credit compliance during the 15 year
project period.
Low Loan-to-Value Ratios
LIHTC has extremely low levels of
foreclosure and tax credit recapture. More
than 99% of the 37,506 projects and almost
2,318,000 housing units placed in service
since 1987 performed as agreed.
The Consortium Mitigates Risk
through low Loan-to-Value Ratios:
Typically:
 Below 40% on New Construction
 Below 60% on Acquisition or Rehabilitation
 Up to 80% on Refinancing of “Mini Perms”

7. Loan Consortium: Affordable Multi-Family Housing
Join the Pathway Lending Loan Consortium for
Affordable Multi-Family Housing Today.
Your Participation Yields Significant Benefits
For More Information:
Contact Mike Clinard at 615.425.7171 or
Mike.Clinard@PathwayLending.org
To Complete the Subscription Agreement,
Visit Us Online: www.PathwayLending.org

8. Loan Consortium: Affordable Multi-Family Housing
APPENDIX A: Loan Consortium Financing Structure
The Loan Consortium for Affordable Multi-Family Housing provides a new source of
long-term, permanent financing for the development, rehabilitation, and purchase
of Low-Income Housing Tax Credit awarded multi-family housing in Tennessee.
Financing Structure:
 15-Year Term with up to a 30-Year Amortization
 Fixed Rate Based on a 10-Year T-Bill Plus a Margin
 Maximum of 80% Loan-to-Value (see Slide 4 for further details)
 Minimum of 1.15x Debt Service
 Secured by First Deed of Trust (Additional Security May be Required)
Fees:
 Application Fee: $250
 Commitment Fee (New Construction): 0.5% Non-Refundable
 Origination Fee (New Construction, Rehabilitation, Refinance): 1.0%
 Servicing Fee: Pathway Lending to receive 25bp during the term of the loan
Commitment Term:
 Up to 24 months on New Construction with 6 month extension option
 60 days on Acquisition, Refinance, and Rehabilitation

9. Loan Consortium: Affordable Multi-Family Housing
APPENDIX B: Low-Income Housing Tax Credits
1. The federal government funds the program: The Department of the Treasury issues tax credits to the
states and requires that the housing built by this program remain affordable for at least 30 years.
2. But the states largely shape what housing gets built: States control the type of housing, the location
and other characteristics to best serve their residents. In Tennessee, at least 51% of units must provide
housing for “low-income” persons (defined as 80% or less of the Area Median Income); Rents, including
utilities, cannot exceed the applicable low-income rent ceiling (30% of household income), and;
Qualified units must remain occupied by low-income tenant for the duration of the financing period.
3. Developers get funds toward construction: Developers may claim housing tax credits directly, but
most sell the tax credits to raise equity capital for their housing project. Tax credits can be claimed
annually over a 10-year period by the property owner. However, the developer needs the money
immediately to pay for development costs, not 10 percent annually for 10 years. Accordingly, the
developer typically syndicates the credits - i.e., sells the rights to the future credits in exchange for upfront cash. With the capital from the investor, developers can limit the money borrowed to fund
construction, reducing both the amount of debt and rent levels.
4. Low-income renters get an affordable home: LIHTC properties must be rented only to families whose
income is at or less than 80 percent of the Area Median Income. Tenants’ rent payments are limited to
30 percent of their income.
5. The Consortium Provides Gap Financing and Generates Benefits: Subscribing Banks contribute to the
development or rehabilitation of low-income housing, creating safe, decent and affordable housing for
the community. This plays a major role in improving economic conditions, incomes, taxes, and jobs in
low-income communities across Tennessee. Subscribing Banks also receive significant benefits,
including competitive yields and CRA Credit from their Regulatory Agencies.