Apartment Acquisition Loans

Apartment Acquisition Loans

Apartment Financing America is an multifamily lender that offers some of the most competitive apartment acquisition loans in the world. Although we are a full service commercial mortgage banking firm, our primary focus is apartment acquisition loans. In maintaining this focus on our core multifamily lending activities, we are able to provide our clients with extraordinarily low interest apartment acquisition loans.

We also provide our clients with unparalleled multifamily lending expertise. We began honing our expertise more than four decades ago when Founder and Managing Director Kathryn Thompson bought her first real estate deal at the age of 16. Our expertise has grown considerably in the last 40 years, but it was her entrepreneurial spirit that gave rise to our apartment lending expertise decades ago.

The apartment acquisition loans we offer are insured by the nation’s Government Sponsored Enterprises, which includes FHA , Fannie Mae and Freddie Mac. We also originate apartment acquisition loans through correspondent relationships, insuring we are always positioned to provide sophisticated real estate investors with the multifamily acquisition loans they require.

FHA Apartment Acquisition Loans

The Federal Housing Administration or FHA is part of the Department of Housing and Urban Development or HUD, the largest mortgage insurance provider in the United States. FHA multifamily loan programs offer long-term, non-recourse, fixed-rate multifamily acquisition loans.

As the availability of alternate sources of apartment acquisition loans has fluctuated greatly, at times being extremely limited, apartment owners and multifamily developers have begun turning to GSE lending to originate new multifamily acquisition loans. FHA multifamily acquisition loans can play a critical role in that it is a source of financing that is always available, regardless of market volatility.

Fannie Mae Apartment Acquisition Loans

The Federal National Mortgage Association (FNMA) or Fannie Mae, was created in 1938 as a federal agency by Franklin Roosevelt to provide liquidity to the single-family housing market by purchasing mortgages underwritten under its guidelines and issuing mortgage-backed securities to the public. Its charter was then updated by the Housing and Development Act of 1968, pursuant to which Fannie Mae became a government sponsored entity or GSE. Its common stock was sold to the public and its preferred stock was retained by the federal government. Further, the securities issuer portion of the business was retained by the federal government and renamed Ginnie Mae. It is important to note that Fannie Mae issued what was, in effect, an implied government guarantee while Ginnie Mae remained the only mortgage securities issuer that actually had the “full faith and credit” guarantee of the federal government.

Over the years, Fannie Mae enlarged its mandate to include underwriting mortgages for multifamily acquisition loans, affordable housing loans, and government-issued revenue bond issues. Fannie Mae actively purchases apartment acquisition loans under the Fannie Mae DUS multifamily loan program. Learn more about the Fannie Mae loan programs offered by Apartment Financing America.

Freddie Mac Apartment Acquisition Loans

The Federal Home Loan Mortgage Corporation referred to as FHLMC, or Freddie Mac, is a government sponsored enterprise (GSE) created in 1970 at provide liquidity, stability, and affordability to the single family housing market. Like its rival, Fannie Mae, Freddie Mac issues insurance for multifamily mortgages underwritten to its guidelines, thereby enabling them to be sold into the capital markets. While Freddie Mac is not a part of the federal government, its credit is considered to be virtually Full Faith and Credit of the United States, thereby facilitating interest rates below those of non-governmental apartment lenders.

Freddie Mac licenses the Program Plus multifamily loans platform in a manner which is similar to the Fannie Mae DUS program. Freddie Mac has a series of loan programs; fixed-rate multifamily loans, affordable housing loans, seniors housing loans and supplemental loans, that mirror almost exactly those of Fannie Mae. The major differences between the two institutions are that Freddie Mac requires a pre-review meeting with its mortgage brokers for each deal. It then makes its own underwriting review of the loan package, and commits in its name.

A Freddie Mac loan is an excellent choice for larger, well-located, brochure quality properties. Freddie Mac apartment acquisition loans deliver very competitive interest rates and terms; and are known for very fast turnaround time when they want to make a loan. Learn more about the Freddie Mac loan programs offered by Apartment Financing America.

CMBS Apartment Acquisition Loans

Commercial Mortgage-Backed Securities or CMBS loans are originated by large investment banks who purchase mortgages secured by income-producing real estate. It can be of any property type but is usually traditional office, retail, hospitality, and multifamily. The individual mortgages are bundled into large portfolios that are rated by credit rating agencies, priced by the market, and sold to institutional investors as securities. The investors receive an interest rate which is the weighted average of the interest rates of the individual loans, less mortgage servicing and fund fees.

Properly-structured, properly rated CMBS apartment acquisition loans can yield investors a good rate of return, while providing investors the safety of a geographically diverse pool of assets, which is unlikely to create a default en massé. Unfortunately, credit default events in 2008-2010 all but destroyed the CMBS market. CMBS pools were, at the time, over-rated by credit rating agencies, the properties were mis-underwritten, and re-insurers who “back-stopped” these securities failed.

CMBS lenders have slowly returned to the market, albeit chastened by past events. Investment banks are making loans but at clearly more conservative underwriting standards and higher rates. While personal recourse for monetary default is not a requirement, investment bankers are insisting on adequate reserves and strict underwriting. Learn more about the CMBS loan programs offered by Apartment Financing America, as well as the Fannie Mae Discount Mortgage Backed Securities program.