Section 1301

Description

Requirements

A Hybrid ARM LoanHybrid ARM LoanMortgage Loan with a total term of 30 years, comprised of an initial term when interest accrues at a fixed rate, and which automatically converts to a term where interest accrues at an adjustable rate. combines the features of fixed rate and ARM LoansARM LoansMortgage Loan with an interest rate that periodically adjusts based on an Index per the Note or Loan Documents. , and has a total term of 30 years, consisting of

  • an initial term when interest accrues at a fixed rate, followed by
  • the remaining term, during which interest accrues at an adjustable rate.

Product Description

Plan Number

Either

 

  • 04934 - 30-Day Average SOFR30-Day Average SOFRCompounded average of SOFR over a specified interest period of 30 days. , or
  • 04891 - 6-month LIBORLIBORLondon Interbank Offered Rate is the benchmark interest rate banks quote to lend funds to one another in the international interbank market for short-term loans. .

Terms

Permitted combinations of fixed rate and adjustable rate terms:

 

  • 5-year fixed rate term, followed by automatic conversion to a 25-year adjustable rate term;
  • 7-year fixed rate term, followed by automatic conversion to a 23-year adjustable rate term; or
  • 10-year fixed rate term, followed by automatic conversion to a 20-year adjustable rate term.

Maximum Loan Amount

Per Part III, Chapter 9: Small Mortgage Loans, Section 901.01: Description.

Ineligible Products
  • Cooperative PropertyCooperative PropertyMultifamily residential property owned by a Cooperative Organization.
  • Military Housing PropertyMilitary Housing PropertyMultifamily rental Property in which 40% or more of the units are occupied by individuals serving in, or employed by, the United States military.
  • MAH PropertyMAH PropertyProperty encumbered by a regulatory agreement, land use restriction agreement, extended use agreement, or similar restriction that limits rents that can be charged to tenants, or imposes income limits on tenants.
  • Near Stabilized PropertyNear Stabilized PropertyNewly constructed or recently rehabilitated Property, with all construction or rehabilitation complete, which is expected to achieve Stabilized Residential Occupancy and the applicable required Underwritten Debt Service Coverage Ratio within 120 days after the Mortgage Loan Origination Date.
  • Seniors Housing PropertySeniors Housing PropertyMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units.
  • Student Housing PropertyStudent Housing PropertyA multifamily residential rental property in which 40% or more, but less than 80%, of the units are leased to either undergraduate or graduate students.
  • Dedicated Student Housing PropertyDedicated Student Housing PropertyMultifamily rental Property in which 80% or more of the units are leased to undergraduate or graduate students.
  • Supplemental Mortgage LoanSupplemental Mortgage LoanMortgage Loan purchased by Fannie Mae that is subordinated to, and has a Mortgage Loan Origination Date after, the Senior Mortgage Loan that is also owned by Fannie Mae.

Prepayment Premium Options

Either

 

  • standard yield maintenance, or
  • graduated Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. .

Prepayment Premium Period End Date / Yield Maintenance Period End Date

Final day of the last Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. during the fixed rate term per the applicable Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. option.

Conversion to Adjustable Rate

Automatic conversion from a fixed rate to an adjustable rate on the 1st day of the 1st Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. following the applicable fixed rate term.

Index During Adjustable Rate Term

Either

 

  • 30-Day Average SOFR30-Day Average SOFRCompounded average of SOFR over a specified interest period of 30 days. , or
  • 6-month LIBORLIBORLondon Interbank Offered Rate is the benchmark interest rate banks quote to lend funds to one another in the international interbank market for short-term loans. , if the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. is
    • CommittedCommittedContractual agreement between you and Fannie Mae where Fannie Mae agrees to buy a Mortgage Loan at a future date in exchange for an MBS, or at a specific price for a Cash Mortgage Loan, and you agree to Deliver that Mortgage Loan. by September 30, 2020, and
    • DeliveredDeliveredSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. by December 31, 2020.

Interest Rate Floor

Must not be less than the combined

 

  • Guaranty FeeGuaranty FeeFee retained by Fannie Mae for credit enhancing a Mortgage Loan or assuming credit risk on a Mortgage Loan, and which may be expressed as a percentage. , plus
  • Servicing FeeServicing FeeFee a Servicer receives for collecting payments, managing operational procedures, and assuming your portion of credit risk for a Mortgage Loan, and which may be expressed as a percentage. , plus
  • InvestorInvestorMBS Investor for an MBS Mortgage Loan, or Fannie Mae for a Cash Mortgage Loan. spread (per Form 4660Form 4660Multifamily Underwriting Standards identifying Pre-Review Mortgage Loans and containing the minimum underwriting requirements (e.g., debt service coverage ratio, loan to value ratio, interest only, underwriting floors, etc.) for all Mortgage Loans. ).

Gross Note Rate During Adjustable Rate Term

Equals the

 

  • IndexIndexBasis for determining the Gross Note Rate of an ARM Loan, including any required alternative index that may be determined necessary by Fannie Mae because the Index is no longer widely accepted or has been replaced as the index for similar financial instruments. , plus
  • Guaranty FeeGuaranty FeeFee retained by Fannie Mae for credit enhancing a Mortgage Loan or assuming credit risk on a Mortgage Loan, and which may be expressed as a percentage. , plus
  • Servicing FeeServicing FeeFee a Servicer receives for collecting payments, managing operational procedures, and assuming your portion of credit risk for a Mortgage Loan, and which may be expressed as a percentage. , plus
  • InvestorInvestorMBS Investor for an MBS Mortgage Loan, or Fannie Mae for a Cash Mortgage Loan. spread (per Form 4660Form 4660Multifamily Underwriting Standards identifying Pre-Review Mortgage Loans and containing the minimum underwriting requirements (e.g., debt service coverage ratio, loan to value ratio, interest only, underwriting floors, etc.) for all Mortgage Loans. ).
Rate Change Date Date the interest rate changes based on changes in the selected IndexIndexBasis for determining the Gross Note Rate of an ARM Loan, including any required alternative index that may be determined necessary by Fannie Mae because the Index is no longer widely accepted or has been replaced as the index for similar financial instruments. . 

Interest Rate Change Frequency During Adjustable Rate Term

Every 6 months, based on the IndexIndexBasis for determining the Gross Note Rate of an ARM Loan, including any required alternative index that may be determined necessary by Fannie Mae because the Index is no longer widely accepted or has been replaced as the index for similar financial instruments. in effect as of the Rate Change Date.

Frequency of Payment Change During Adjustable Rate Term

P&IP&IPrincipal and interest payments are recalculated for every Rate Change Date.

Maximum Interest Rate Change

Plus or minus 1% of the then-current interest rate both

 

  • at conversion from fixed rate to adjustable rate, and
  • during the adjustable rate term.

Maximum Interest Rate During Adjustable Rate Term

5% over the fixed rate.

Index Look-Back Period

For:

 

  • SOFRSOFRFor any Business Day, the Secured Overnight Financing Rate as published by the Federal Reserve Bank of New York, or any successor administrator, on the Federal Reserve Website. -indexed Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. , 1 Business DayBusiness DayAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, a day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. before the Rate Change Date; or
  • LIBORLIBORLondon Interbank Offered Rate is the benchmark interest rate banks quote to lend funds to one another in the international interbank market for short-term loans. -indexed Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. , 45 days before the Rate Change Date.

Interest Accrual Method

Must be Actual/360.

Payments

Calculated using a 30/360 interest accrual method.

Interest-Only

Must not exceed the fixed rate term.

You must rate lock the Hybrid ARM LoanHybrid ARM LoanMortgage Loan with a total term of 30 years, comprised of an initial term when interest accrues at a fixed rate, and which automatically converts to a term where interest accrues at an adjustable rate. with the Multifamily Trading DeskMultifamily Trading DeskTeam that quotes interest rate pricing for a Mortgage Loan and can be contacted at (888) 889-1118. (MBSMBSMortgage-Backed Security or cash).

You must underwrite the Hybrid ARM LoanHybrid ARM LoanMortgage Loan with a total term of 30 years, comprised of an initial term when interest accrues at a fixed rate, and which automatically converts to a term where interest accrues at an adjustable rate. based on the applicable fixed rate terms.