NEWS APARTMENT FINANCE
TODAY • July/August 2008 Fannie Mae Rolls Out Refi
Plus Fannie Mae has finished developing Refi Plus, a portfolio retention
tool that it plans to introduce by the end of 2008. The program allows
borrowers to lock in rates for refinancing existing Fannie Mae loans up to two
years in advance of the prepayment period end date, in conjunction with supplemental
financing. The company feels the time is perfect for such a product, since
acquisition activity has sharply declined over the last six months and more owners
are opting to refinance rather than sell. “If you have two years of
yield maintenance remaining, but you like where rates are today and you’re
ready to put a supplemental on, we now have a product for that,” said Heidi
McKibben, Fannie Mae’s vice president of multifamily production. “This
will give borrowers the flexibility to lock in today’s rates if they feel
like we’re in a rising interest-rate environment, take out a supplemental,
and basically lock up their new loan up to two years out.” Borrowers
using Refi Plus are able to get cash out immediately in the form of a supplemental
loan; they don’t have to wait for the existing loan to mature. Additionally,
there’s no prepayment premium on the existing loan, so there’s no need
to fund a good-faith deposit. Borrowers also eliminate uncertainty about
future rates since they’re locking in the rate of the refinance loan on a
forward basis, up to 24 months out. The interest rate of the supplemental mortgage
loan and the refinance mortgage loan are rate-locked simultaneously. Fannie
Mae’s Delegated Underwriting and Servicing DUS) lenders are able to underwrite,
commit, rate-lock, and deliver most Refi Plus loans without prior review by Fannie
Mae, speeding up the deal cycle time. All multifamily loans of more than $750,000
are eligible, although loans of more than $25 million that want to use Refi Plus
would need to be pre-reviewed by Fannie Mae before the deal closes. Because
Fannie Mae is already familiar with the property, borrower documentation is reduced.
Borrowers can certify that there haven’t been any changes to its organizational
structure, or to its financial strength and credit standing, in lieu of providing
new documentation. However, new third-party reports, such as an appraisal report
and physical needs assessment, are required.
—Jerry Ascierto | 
