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Fannie Mae Funded Forward Rate Lock Commitment

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Fannie Mae Funded and Unfunded Forward Rate Lock Commitment

The Fannie Mae Funded and Unfunded Forward Rate Lock Commitment provides funding for both the construction and permanent apartment loan for multifamily properties that are eligible for 9% Low Income Housing Tax Credits.

 

Overview: Under a Fannie Mae transaction, Fannie Mae would issue a Forward Commitment agreeing to purchase a permanent commercial mortgage loan at a specified interest rate, post construction, including lease-up and stabilization. Simultaneously, Fannie Mae funds the construction loan, either directly or indirectly through an approved construction lender. Either way, both types of Forward Commitments are collateralized and/or secured by a Letter of Credit issued by an entity rated "A" or better or by a Guaranteed Investment Contract issued by an entity rated "AA" or better.

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Fannie Mae Funded and Unfunded Forward Rate Lock Commitment Program Guidelines

Benefits
  • Hedge your interest rate risk from interest rate volatility for the permanent mortgage by locking in the rate in advance of construction completion.
Eligibility
  • Available for new construction
  • Available for properties under substantial rehabilitation
Forward Term 24 or 30 months with one 6-month extension.
Good Faith Deposit For Funded Forward Rate Lock Commitments 2% of the maximum loan amount and 3% for Unfunded Forward Rate Lock Commitments, due at rate lock; refundable upon conversion to permanent loan.
Standby Fee For Unfunded Forward Rate Lock Commitments a one-time, up-front fee is required. Amount based on the term of the Forward Commitment.
Borrower Certificate At the time of rate lock, the borrower will execute a Borrower Certificate that places a junior lien on the property as security for a possible non-delivery event. The lien is released upon delivery of the permanent loan
to Fannie Mae or upon payment of the non-delivery fee, if applicable.
Financing Structure Fannie Mae issues a Forward Commitment agreeing to purchase a permanent mortgage loan from the lender at a specified interest rate following construction completion, lease-up, and stabilization. At the same time, Fannie Mae advances funds to the Construction Lender on an interest-only basis. Funded Forward Commitments are fully collateralized by a Letter of Credit or other acceptable collateral.
Permanent Term Up to 30 years.
LTV Up to 90%.
Recourse Non-recourse.
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