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Andrew LaSalla
Andrew LaSalla II is one of the most trusted financial consultants in the residential and commercial lending business. With over seven years of of property loan underwriting experience, Andrew's sole focus is helping clients successfully navigate complex financial laws, terms, rules, paperwork, and transactions necessary to secure loans for new construction, purchase, or refinancing of multifamily, healthcare, affordable housing and student housing properties. Whether it's HUD, FHA, or MAP loans, Andrew is committed to tailoring financial solutions for every client he serves.
Fannie Mae multifamily loans are a great product that offer customized fixed rates amortized over up to thirty years that are non-recourse. The various multifamily property types include affordable housing, conventional apartments, senior and student housing, along with cooperative and manufactured housing. To qualify for a Fannie Mae loan the investors and or management company must be experienced. Read on to learn more about Fannie Mae loans to determine if they are a match for your purchase or refinance transaction.
Fannie Mae Loan Limits, Rates and Terms
The typical loan features of Fannie Mae include a term that is fixed for 5,7,10 or 12 years that is amortized up to 30 years, with a balloon payment due at the end of the fixed rate term. In some circumstances, there is an option to pay interest only for the initial period of the loan. These loans carry a yield maintenance declining prepayment penalty. The loans are assumable with an underwriting and transfer fee.
The application process requires more paperwork and third-party reports than a conventional loan, but typically offers more favorable rates and terms. These transactions typically take between 45 and 90 days to close once an application and deposit have been received. The timing from application to close often depends on the complexity and variables of the transaction.
Non-Recourse Financing
Fannie Mae offers non-recourse financing where the debt is secured by the loan collateral, and the lender is not allowed to come after any personal assets unless there is fraud or deception or other criminal acts. Bank programs for apartment lending, on the other hand, often require recourse loans. This means that the lender can go after the principals of the transaction assets to recover the losses of the transaction in the event of a default. If banks offer non-recourse financing, it will be offset by a much higher interest rate to mitigate the risks in the event of a default.
Fannie Mae loans impose more restrictions on the property to ensure that the asset is maintained and that capital improvement schedules are followed. This ensures that the asset is protected as much as possible and the property is competitive and maintains the best possible value in the event of a default.
Fannie Mae Interest Rates
Fannie Mae offers floating interest rates spread over an index, or fixed rates with multiple options amortized over up to a 30-year period. Fannie Mae offers LTV’s of up to 80%. Fannie Mae lenders evaluate the transaction based on property condition and the market strength where it is located. A market where occupancy and values are decreasing could be a reason for not being able to qualify.
After the first mortgage has been seasoned, Fannie Mae will allow subordinate debt, and provide a second mortgage which is 12 months after the date of the first mortgage. The loan amount can be increased up to a maximum of 80% LTV with the additional subordinate financing. Underwriters look at the property condition, the occupancy, and net income to make their final decision and providing an approval.
Looking for more information? Contact a loan expert with LSG Lending Advisors to see if your purchase or refinance transaction would be a good fit for a Fannie Mae program.