Opening of Ace Hardwood Store. Loan provided by Commercial Loan Direct.
Written by Leane Eicoff| September 28, 2018
A Fannie Mae ("Fannie Mae" or FNMA) mortgage is a loan product for apartment buildings with 5+ units. These loans can be fixed or floating and are generally non-recourse. It is a great product for various multifamily property types, including conventional apartments, affordable housing, senior housing, student housing, cooperative housing, and manufactured housing. It can also be used for mixed-use buildings where the other commercial units make up 20% or less of the gross income. Fannie Mae loans are only available for experienced multifamily investor/managers.
The following are typical loan features of a Fannie Mae mortgage, but are subject to change depending on market conditions or regulatory changes:
The Fannie Mae process is very similar to the CMBS and Freddie Mac loan application processes since the mortgages are also pooled together and sold as bonds to investors. Because of this, there is usually a little more paperwork, longer loan documents, and more third party report requirements than a conventional mortgage, but the process isn"t prohibitive and well worth it for the right investor. Loans typically close 45-60 days after the application and deposit have been furnished to the lender.
In order to get a Fannie Mae rate quote and formal application, plan on submitting the following documents:
Keep in mind that every lender has slightly different requirements and some won"t give an indicative quote without receiving more information than what is listed above. It is also important to understand that the rate will fluctuate until it is locked (typically the day before or of closing) and is determined by not only the current corresponding treasury rate, but also by the spread (which may change) and satisfactory due diligence and third party reports. The rate can be locked ahead of time, but depending on how far in advance, it may involve paying a lofty financial price or a higher interest rate.
If you are in agreement regarding the rate that was quoted to you by the Fannie Mae Lender, the next step is for you to execute the application, pay your due diligence deposit (approximately $4,500-8,500 for small loans and $15,000 for DUS), and start assembling the diligence information needed to close your loan. Keep in mind that the deposit paid for the loan doesn"t include the legal costs for closing and securitizing the loan (which is typically another $8,000-12,000) as well as any origination fee. The diligence items usually include the following:
Borrower Documents
Key Principal/Carve-Out Guarantor Documents
Principal/Sponsor (Non-Guarantor) Documents
Property-Related Documents
Property Management Documents
Special Attributes
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