AMA - Agency Multifamily Debt (Freddie Mac & Fannie Mae)

[Ian Stuart]

BP Community:

Hope you’re all enjoying the bear market!

My name's Stuart, I'm an agency multifamily lender with Berkadia that finances apartment buildings throughout the Western US with Freddie Mac and Fannie Mae. Berkadia is #1 Freddie Mac Optigo, #3 Fannie Mae DUS, and #3 HUD/FHA multifamily lender in the country as of YE 2022, and my team originated ~$325,000,000 in agency loan volume last year.

Lately I’ve noticed many of you asking about multifamily financing options, and thought this would be an opportunity to host an AMA regarding Freddie Mac and Fannie Mae agency multifamily financing, an area in which I specialize.

Feel free to ask any questions you may have regarding Freddie Mac and Fannie Mae multifamily financing in the comments - or DM me directly. Below is a list of categories that you might have questions on. I'll do my best to answer your questions as directly as possible with minimal fluff. 

Thanks! Look forward to hearing from you all.

-Ian 

1. Loan Programs: Conventional loans (>$7.5M), small balance loans (<$7.5M), lease up / near-stabilization loans, 2nd lien supplemental loans, student housing, seniors housing, MHC, green financing, etc.

2. Loan Sizing Parameters: LTV, DCR, DY, amortization, stress tests, exit tests, etc.

3. Interest Only Term (IO): Partial term IO, full term IO, IO loan sizing parameters, IO pricing, etc.

4. Interest Rates: Current spreads, rate structure, buydowns, mission driven business, factors that influence your rate, etc.

5. Loan Costs, Deposits, and Escrows: Origination fees, application fees, third party reports, legal, insurance review, title & escrow, rate caps (floating rate loans), due diligence deposit, rate lock deposit, standard escrows, etc.

6. Rate Lock Process: Standard rate lock, Freddie Mac Index Lock, Fannie Mae SRL, extended delivery, etc.

7. Loan Closing Process & Borrower Forms: Soft quotes, hard quotes, loan application, underwriting period, standard loan forms, loan commitment, rate lock, loan closing, time to close (start to finish), etc.

8.  Prepayment Penalty (Defeasance, Yield Maintenance, Flexible Prepay Options): What is defeasance and how does it work?, What is yield maintenance and how does is work?, flexible prepayment penalty options?

9. NOI Underwriting Methodology: NRI and EGI, real estate taxes, operating expense underwriting rules of thumb, replacement reserves, appraiser’s impact on lender underwriting, expense comps, etc.

10. Borrower Financial Strength & Experience: Liquidity, net worth, prior multifamily experience, prior agency borrowing experience, etc.

11.  Management Company Requirements: Self management OK?, professional management requirements, onsite employee requirements, model units, etc. 

12.  Insurance Requirements: Standard agency insurance requirements, insurance review costs, etc.

13. Legal Requirements and Loan Documents: Do I need a lawyer when I do an agency loan?, how much does it cost?, what legal documents should I pay attention to and why?

14. Agency CMBS Market Mechanics (How It All Works): How does the agency CMBS market work?, is Freddie Mac my actual lender, what is the "secondary market", Freddie & Fannie's Mission, etc.

15. List of Licensed Agency Multifamily Lenders: Who to use, who to avoid, why you don't need a broker to secure agency debt.