Bond Lenders
Information for Lenders
Background Information for Lenders
The Commission does not make loans. Through you, we provide your
customers with below-market financing options. The Commission does not
have additional underwriting requirements. Loans involving bond
financing remain your loans. You determine the amount of the loan
according to your policies and underwriting criteria. The interest
savings to the borrower often increases the borrower's financial
strength and in turn creates a stronger more viable project.
The Commission is a self-funded state entity that neither uses tax
dollars nor the good faith of the state of Washington. Commission bonds
stand alone. The Commission has developed several programs and financing
policies that ensure the integrity of Commission bonds.
Two Financing Methods
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Letter of Credit
To provide a letter of credit the bank
does not necessarily have to be the bank who is making the loan. The
bank underwrites the project and determines the amount of the letter
of credit. The bank will work with the Commission, the Commission's
bond counsel, investment bankers, the bond trustee, and the
Commission's financial advisor in issuing and selling bonds to fund
the loan to be made by the bank. The borrower will make mortgage
payments to the bank as in any other loan transaction. The trustee
will draw on the letter of credit to pay the bond holders. The
Commission requires that the letter of credit achieve at least an
"A" rating from a rating agency approved by the Commission such as
Moody's, Standard and Poor's, or Fitch.
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Purchasing a Commission-issued bond/loan
For a bank
funding a loan to a borrower, the Commission has developed the
STEP (Streamlined Tax-Exempt Placement)
program for nonprofit 501(c)(3) organizations and STEP Home for for-profit
multifamily developers, which allow the bank to earn tax-exempt interest on the
loan.
This page was
modified on 04/27/2007.
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