Best Way to Use Agency Small Balance Loan Products? (Multifamily)

[Jered Sturm]

Hey BP Members. 

up until this point, our company has used local and regional banks for our debt. Now that our balance sheet and liquidity has risen we are weighing in agency debt as well for a potential $3-4M Purchase, but my experience level with it is low so I have a few questions I am hoping others have experienced. 

I have heard Fannie and Freddie are solid options for stabilized MF under $5M when using their small balance products. 

-What type of costs ranges are typical for third party, lender legal and closing, and any fees? 

-I have never used a mortgage broker in the past. Would you suggest it when getting agency debt? If so I am anticipating a 1% fee from the mortgage broker. Am I in the right ballpark for this type of loan and size?

Any additional thoughts or experience with this type of debt is appreciated!

[Carlos Flores]

I have some of this in a matrix on my website but can't link to it here.  Minimum occupancy is generally 90% for 90 days, preferably 90 for 120.  85% minimum economic occupancy.  Lender fees/deposits: Freddie SBL; ~$10k, Fannie ~$10-20k.  The lender will also require a good faith deposit equal to a small percentage of the loan amount, which is refundable to you at closing.

I'd recommend a Mortgage Broker, but then again, I'm bias.  Many brokers charge a fee on top of the lender's origination fee.  For the most part, we "split" the origination fee with the lender -- so it's still a total of 1%.  Every agency lender is different.  Some like certain class deals in major metros, some are more liberal and creative, and some have a reputation of retrading (sticking you with a higher rate or lower leverage) at the last minute.  A good mortgage broker will navigate these waters for you.