Fannie Mae Structured Adjustable Rate Multifamily Loans
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Fannie Mae Structured Adjustable Rate Multifamily Loans are for the purchase or refinance of existing, stabilized traditional and manufactured housing communities. Senior housing, student housing, and moderate rehabilitation mortgages may be eligible on a case-by-case basis. Affordable housing loans, bond credit enhancements and substantial rehabilitation loans are not eligible. The minimum loan amount is $25 million. There is no programmatic maximum loan amount. The maximum loan amount is based on a maximum loan to value ratio of 75%, with minimum DSCR of 1.0x. Loan terms range from 5-10 years.
Loan Program
Fannie Mae Structured Adjustable Rate Multifamily | Fannie Mae DUS Multifamily Program
Loan Purposes
Fannie Mae Structured Adjustable Rate Multifamily Loans are for the acquisition or refinance of existing, stabilized multifamily properties. Fannie Mae Bond Credit Enhancements and Substantial Rehabilitation Loans are not eligible.
Property Types
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.
Eligible Borrowers
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.
Loan Amounts
Minimum loan amount: $25 million
Maximum loan amount: Maximum based on loan to value and debt service coverage ratios
Maximum loan amount: Maximum based on loan to value and debt service coverage ratios
Loan Term
5, 7, or 10 years
Amortization Period
Up to a maximum of 30 years
Maximum LTV Ratio
75%
Debt Coverage Ratio
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.
Mortgage loan amount shall not exceed that of a fixed-rate loan of similar terms.
Prepayment Terms
Loans may be voluntarily prepaid upon payment of graduated prepayment based on one of the following:
One-year lock-out, then declining prepayment premium 4% year 2, 3% year 3, 2% year 4, 1% thereafter.
One-year lock-out with a 1% prepayment premium thereafter. No premium during last 3 mos of loan.
One-year lock-out, then declining prepayment premium 4% year 2, 3% year 3, 2% year 4, 1% thereafter.
One-year lock-out with a 1% prepayment premium thereafter. No premium during last 3 mos of loan.
Personal Liability
Fannie Mae multifamily loans are non-recourse, with standard carve-outs for bad acts
Accrual
Actual/360
Escrow Requirements
Replacement Reserve, property tax and insurance escrows are required.
Third Party Reports
Standard third-party reports including Appraisal, Phase 1 Environmental Assessment (ESA), and a Property Condition.
Interest Rate Index
One month or three month LIBOR.
Interest Rate Adjustments
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.
No limit on rate changes.
Interest Rate Cap
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 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.
Interest Rate Floor
The interest rate shall never be less than the Margin.
Rate Lock
30 to 180 day commitments. An early rate lock feature is available, allowing the borrower to lock a rate after preliminary underwriting.
Convert to Fixed Rate
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.
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.
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