FANNIE MAE® DUS
Supplemental Loans
BENEFITS
- Lower cost than refinancing.
- Access to additional capital.
- Flexible loan terms.
- Competitive pricing.
- Certainty of execution.
- Speed in processing and underwriting.
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ELIGIBILITY
- Stabilized Conventional properties, Multifamily Affordable Housing Properties, Seniors Housing Properties, Student Housing Properties, and Manufactured Housing Communities.
- Subordinate to existing Fannie Mae fixed rate or variable rate Mortgage Loans.
- Bond Credit Enhancement Mortgage Loans are eligible for Supplemental Mortgage Loans with prior approval of Fannie Mae.
- Lender must be the servicer of the existing Fannie Mae Mortgage Loan.
- Fannie Mae must be the only debt holder on the property.
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TERM
- A minimum of 5 years and a maximum of 30 years.
- May be either coterminous or non-coterminous with the Maturity Date of the Senior Mortgage Loan.
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AMORTIZATION
Up to 30 years.
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INTEREST RATE
Fixed- and variable-rate options available.
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MAXIMUM LTV
As high as 75%, depending upon asset class and use of proceeds.
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MINIMUM DSCR
As low as 1.30x, depending upon asset class and use of proceeds.
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SUPPLEMENTAL LOAN TIMING
Supplemental Loans are available 12 months after the closing of the senior Fannie Mae Mortgage Loan.
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PREPAYMENT AVAILABILITY
- Supplemental Mortgage Loans may be voluntarily prepaid upon payment of yield maintenance for fixed rate loans and graduated prepayment for variable rate loans.
- The Prepayment Premium Period End Date of a Supplemental Mortgage Loan need not coincide with the Prepayment Premium Period End Date of the Senior Mortgage Loan.
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RATE LOCK
30- to 180-day commitments. Borrower may lock the rate with Streamlined Rate Lock option.
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MATURITY
Supplemental Loans can be either coterminous with the underlying senior loan, or non-coterminous.
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ACCRUAL
30/360 and Actual/360.
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RECOURSE
Non-recourse execution is available with standard carve-outs for “bad acts” such as fraud and bankruptcy.
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ESCROWS
Replacement reserve, tax and insurance escrows are typically required, based on the resulting Tier of the combined Pre-Existing Mortgage Loan and Supplemental Mortgage Loan.
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THIRD PARTY REPORTS
A new Appraisal is required. Other standard third-party reports, including Phase I Environmental Assessment and Property Condition Assessment may not be required if certain conditions are met.
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ASSUMPTION
Supplemental Mortgage Loans are typically assumable with a concurrent assumption of the senior Mortgage Loans, subject to review and approval of the new borrower’s financial capacity and experience.
