Fannie Mae Adjustable Rate Apartment Loans

Answer

Conventional apartments; Multifamily Affordable Housing Properties; Seniors Housing Properties; and Manufactured Housing Communities. Mortgage Loans secured by properties undergoing Moderate Rehabilitation may be eligible on a case-by- case basis.

Answer

Minimum loan amount: $25 million
Maximum loan amount: Maximum based on loan to value and debt service coverage ratios

5, 7, or 10 years

Up to a maximum of 30 years

75%

Loans may be voluntarily prepaid upon payment of graduated prepayment based on one of the following options:

1. One-year lock-out, then declining prepayment premium; 4% second year, 3% third year, 2% fourth year, 1% thereafter.
2. One-year lock-out followed by a 1% prepayment premium thereafter. No prepayment premium during the last 3 months of the loan term.

All Fannie Mae multifamily loans are non-recourse, with standard carve-outs for bad acts such as fraud and bankruptcy

Actual/360

Replacement Reserve, and tax and insurance escrows are required.

Standard third-party reports, including Appraisal, Phase 1 Environmental Assessment, and a Property Condition.

• 1.00x, using a DSCR calculated based on a variable underwriting rate equal to sum of (i) the Index, plus (ii) the investor spread, guaranty fee and servicing fee (the “Margin”), plus (iii) the interest rate cap escrow (if the cap term is shorter than the loan term), plus (iv) 3%, plus (v) the amortizing constant for that built-up rate.
• Mortgage loan amount shall not exceed that of a fixed-rate loan of similar terms.

One month or three month LIBOR.

• Interest rate adjusts based on changes to the underlying Index and is equal to the Index plus the Margin. In no event shall the interest rate ever be less than the Margin.
• No limit on rate changes.

• Structured ARMs have no built-in periodic or lifetime caps. Instead, the Borrower must purchase an interest rate cap from an approved interest rate cap provider.
• The term of the initial interest rate cap need not be equal to the term of the Mortgage Loan, but must be for at least 5 years.
• If the mortgage loan term is longer than the interest rate cap term, the Borrower must escrow monthly for the purchase of the next interest rate cap.

The interest rate shall never be less than the Margin.

30- to 180-day commitments. An early rate lock feature is available, allowing the borrower to lock a rate after preliminary underwriting.

Loans have a conversion feature whereby the interest rate may be converted to a 7- or 10-year fixed-rate loan on any rate change date beginning with the first day of the second loan year and ending on the first day of the third month prior to maturity, provided the loan has not been delinquent during the previous 12 months and the Borrower is not in default under any loan documents.

• No prepayment penalty charged at the time the ARM converts to a Fixed Rate.
• Minimal re-underwriting; Lender determines that the current NOI can support the new Fixed Rate.
• No increase in the loan amount; loan may be eligible for a Supplemental loan.