Fannie Mae tops $1 billion in DUS/MBS commitments Fannie Mae has done more than $1 billion in business through its Delegated Underwriting and Servicing (DUS)/MBS product based on an Actual/360 payment schedule.
Available since May 1998, the Actual/360 payment schedule gives lenders the ability offer borrowers two different payment options. The payment schedule is widely used in the multifamily industry, particularly for securitized loans.
"Given the response to the option, it is clear that the Actual/360 payment schedule is meeting the needs of both borrowers and investors," says Richard Lawch, Fannie Mae vice president of multifamily capital markets.
The Actual/360 schedule offers borrowers lower coupon rates, less amortization and more loan dollars - in certain interest rate environments - than the 30/360 method. However, a borrower using the Actual/360 method will pay more interest on an annual basis than the 30/360 method, assuming the same interest rate. Also, the calculation of interest due on the monthly principal and interest payment is based on the actual number of days in the month. The 30/360 method assumes a 30-day month for the calculation if interest.
Freddie Mac breaks early year funding record In the first two months of 1999, Freddie Mac funded more than
$1 billion of multifamily mortgages, outpacing its previous record of $280 million set in 1996.
The flexibility and depth of Freddie Mac's financing capacity is evidenced by the purchase of three mortgages for a large East Coast-based REIT totaling $104 million. Two of the mortgages have 12-year terms that are interest-only for 10 years, and amortize on a 30-year schedule for the last two years. The third mortgage is interest-only with an eight-year term. Columbia National Real estate Finance was the lender for the transactions.
"We consider REITs to be customers with many financing options," says Mitchell Kiffe, vice president for loan production in Freddie Mac's multifamily division. "When we have the opportunity to book the quality business these properties represent, we aggressively go after it. On the other hand, we know that REITs have access to many different sources of capital, and they do not always select sound, first-mortgage financing."
Kiffe also notes that volatility in the capital markets has been reduced and that competition for quality properties at competitive financing terms is heating up.