Opening of Ace Hardwood Store. Loan provided by Commercial Loan Direct.
Written by Leane Eicoff| September 28, 2018
A Federal Home Loan Mortgage Corporation ("Freddie Mac" or FHLMC) mortgage is a non-recourse loan product for multifamily properties with 5+ units. These loans can be fixed, floating, or a hybrid of both, with interest-only periods available. It is for various multifamily property types, including conventional apartments, affordable housing (tax-exempt and taxable), seniors housing, student housing, cooperative housing, and manufactured housing. Freddie Mac loans are only available for experienced multifamily investor/managers.
The Freddie Mac due diligence and closing process is very similar to the Fannie Mae and CMBS processes since all three have loans that are pooled together and sold as bonds to investors. Because of the legal requirements for securitization, there is more paperwork, documentation, and diligence requirements than a conventional mortgage, but the process isn"t prohibitive and well worth it for the right investor. Loans typically close 45-90 days after the application and deposit have been returned to the lender.
In order to get a Freddie Mac multifamily rate quote and application, plan on submitting the following documents:
Although Freddie has standardized requirements for approving and closing the loan, the lenders may have varying requirements for what they request for issuing an application. Also, the rate will fluctuate until it is locked (typically the day before or of closing unless an Early Rate Lock is selected) and is determined by not only the current corresponding treasury rate, but also by the spread (which may change), and satisfactory due diligence analysis and third party reports.
If you are in agreement regarding the rate that was quoted to you by the lender, the next step is for you to execute the application, pay your due diligence deposit (approximately $2,500-5,500 for small loans and $15,000 for standard loans), 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 $5,000-10,000) as well as any origination fee or Freddie Mac fee (greater of $2,000 or 0.1% of the loan on standard loans).
The diligence items usually include the following:
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