What are eligible properties for each agency loan program?
Eligible property types for Fannie Mae and Freddie Mac:
Apartments
Affordable apartments
Manufactured housing developments
Seniors housing
Student housing.
Constuction loans on these property types
Eligbile property types for FHA:
Senior Housing
Independent Living
Assisted Living
Skilled Nursing Facility
Continuing Care Retirement Communities
Healthcare – Hospitals (for profit, not for profit and investor owned).
Construction Loans on these property types
The standard terms right now are in the 5% range, 35 year amortization, up to 85% LTV or LTC, non-recourse.
Refinancing is after stabilized at 90% for three consecutive months, no ownership seasoning, 85% cash out.
The process for non construction is 4 - 5 months
The process for construction is 9 - 12 months.
How does HUD’s FHA loan program work?
HUD approved lenders compile an insurance application for mortgage insurance on behalf of a borrower to submit to HUD. HUD reviews the application and, if acceptable, issues a commitment to insure. The HUD approved lender then makes the loan to the borrower and that loan carries the HUD 99% insurance guarantee. Typically, most HUD loans are funded through the insurance of Ginnie Mae securities. Among other things the Ginnie Mae security provides for the guarantee of timely payments and increases the overall insurance to 100% of the loan amount.
What are the MAP and LEAN programs within the HUD loan umbrella?
MAP and LEAN program designations are earned by HUD lenders based upon experience and qualifications.
The MAP program began in 2000 and transferred certain responsibilities from HUD to the lender in exchange for faster and more consistent processing. In 2008, HUD instituted the LEAN program for healthcare applications. LEAN focused on the experiences learned within the MAP program and further streamlined the loan process by eliminating duplicative tasks. Currently, the LEAN program is only available for healthcare loans – skilled nursing, assisted living and board and care facilities.
How does the Fannie Mae DUS loan program work?
Fannie Mae formed their Delegated Underwriting and Servicing (“DUS”) program back in 1988. By charter, they are not allowed to lend directly to borrowers, so they developed a network of intermediaries that are licensed to provide financing on their behalf. The DUS program is a delegated model. The DUS lenders are delegated in most instances to originate, underwrite, close and service loans that are then guaranteed by Fannie Mae. This system of delegation is effective since the DUS lenders generally share in the risk associated with any given transaction.
How does the Freddie Mac Program Plus work?
While Freddie Mac and Fannie Mae are often grouped together as government sponsored enterprises, there are some distinct differences between the two. Freddie Mac also has a network of intermediaries (Program Plus providers) that originate new loan opportunities for them. Distinct from Fannie Mae is the fact that Freddie Mac’s model is not a delegated one. The Program Plus providers do not share in any of the risk associated with any given transaction. This necessitates more of a central processing notion with Freddie Mac versus Fannie Mae’s delegated model.
What are the pros and cons of each agency loan program?
Fannie Mae and Freddie Mac – Throughout the recent turmoil in the market, both Fannie Mae and Freddie Mac have consistently been providing liquidity to the multifamily market. While many other sources (conduits for example) have exited the market, the agencies have continued to offer attractive loan terms. Interest rates have remained low for an extended period of time.
HUD – In the current environment HUD is providing greater proceeds, longer terms, lower interest costs and more complete non-recourse lending compared to other programs. The main negative to HUD is the time it takes to complete a loan application process which is significantly longer than other loan programs.
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