Fannie Mae DUS 7/4 ARM Mortgage
Fannie Mae’s DUS loan program has been the leading source of financing to the multifamily industry for the past two decades. JLL and its
predecessor firms have participated in this risk sharing program since 1998. Over this period, we have built a portfolio exceeding $5 billion of
quality multifamily loans with Fannie Mae. The delegated model, where Fannie Mae has a limited role in the review of individual assets, fits well
with JLL’s strengths: responsive service, entrepreneurial thinking, and effective loan structuring.
JLL and Fannie Mae offer loan programs that serve a wide variety of affordable housing communities, with loan terms to meet many different
financing objectives. JLL has consistently been one of Fannie Mae’s leading affordable housing providers, and was recently ranked as the
sixth largest affordable housing lender in the country by Affordable Housing Finance. Outlined below are the parameters of Fannie Mae’s “7/4
ARM” product for affordable multifamily properties, which is a floating rate loan with an embedded interest rate cap.
Program Benefits:

Low initial interest rate with the comfort of a pre-determined maximum lifetime rate.

Embedded interest rate cap makes this the easiest variable rate program offered by the GSEs. No
external caps or swaps to be purchased.

Loans under this program qualify for the maximum LTV available thru Fannie Mae (80%).

Maximum flexibility, as the loan can be retired at a nominal prepayment penalty after year one or
refinanced with a Fannie Mae fixed rate loan.
Eligible Properties:
Refinance or acquisition of existing, stabilized affordable multifamily properties.
Eligible Borrowers:
Single asset entities. Waivers are available in certain circumstances.
Minimum Occupancy:
Properties are eligible once 85% physical occupancy and 80% economic occupancy have been achieved for 3
consecutive months.
Maximum LTV:
80%. The loan amount may not exceed that of a fixed rate loan with similar terms.
Minimum DSCR:
1.0x at the maximum lifetime interest rate. 1.20x at the 7-year fixed rate available at the time of commitment.
Loan Term:
7 years.
Loan Amortization:
30 year maximum.
Interest Rate:
Interest rate indexed to one month LIBOR plus a margin. Rate adjusts monthly based upon changes to the
underlying index.
Interest Rate Cap:
Maximum monthly interest rate adjustment of 1% up or down, with a maximum lifetime interest rate established
at rate lock. The maximum interest rate is typically between 5.30% and 5.50%.
Prepayment:
One year lockout followed by a 1% prepayment penalty thereafter. No penalty during final 90 days of loan
term. The penalty is waived if the loan is refinanced with Fannie Mae.
Conversion to Fixed
Rate:
Loans are convertible to a fixed-rate loan at no penalty between years 2 and 5. Prepayment Penalty is waived
for converted loans. No increase to the loan amount at the time of conversion, though properties are eligible
for supplemental financing after Conversion.
Recourse:
Non-Recourse with the exception of standard carve outs for “bad acts”.
The information contained herein is provided for discussion purposes only and is subject to change in any and all respects. This information
is not, nor should it be construed as, a commitment by Jones Lang LaSalle to provide a loan or any other service. Further, if Jones Lang
LaSalle does commit to lend via execution of future documentation, such future documentation, and the process required to secure said
documentation, may differ materially from the information provided herein
9/24/2015
Supplemental Loans:
Supplemental loans may be available after the first year of the mortgage term.
Escrows:
Real estate taxes, insurance premiums and replacement reserves. A repair escrow may be required if deferred
maintenance exists at closing.
Timing:
45-60 days from engagement to closing.
Fees and Expenses:

Third party reports — Appraisal, Phase I Environmental Assessment and Property Condition Assessment
(PCA). Seismic reports required in certain portions of the country.

JLL financing fee

Other standard real estate transactional costs (legal, title, etc.)

A 2% rate lock deposit is paid at time of rate lock and refundable after Fannie Mae purchases loan, which
is typically within 30 days of loan closing.
For more information, please contact:
Tim Leonhard
Managing Director
Phone: +1 817 310 5800
Email: [email protected]
The information contained herein is provided for discussion purposes only and is subject to change in any and all respects. This information
is not, nor should it be construed as, a commitment by Jones Lang LaSalle to provide a loan or any other service. Further, if Jones Lang
LaSalle does commit to lend via execution of future documentation, such future documentation, and the process required to secure said
documentation, may differ materially from the information provided herein
9/24/2015