Fannie Mae creates single-class MBS that represent beneficial ownership interests in a pool of mortgage loans secured by one or more multifamily (5 or more units) residential properties.
Creating a Multifamily MBS begins with a mortgage loan made by a financial institution or other lender to a borrower to finance or refinance the purchase of a multifamily property (e.g., an apartment building, seniors housing facility, manufactured housing community, cooperative property). Many multifamily properties qualify as affordable housing properties.
Multifamily loans are made to borrowers under varying terms (e.g., 10-year, 7-year, fixed-rate, adjustable-rate, full or partial interest only, etc.). During the life of a multifamily loan, the balance is generally amortized over an amortization term that is significantly longer than the term of the loan. As a result, there is little amortization of principal, resulting in a balloon payment at maturity. The borrower usually repays the loan in monthly installments that may include only interest for the entire term of the loan, only interest for a portion of the term and then both principal and interest, or principal and interest for the entire term of the loan. Multifamily loans may have been originated or serviced under our Delegated Underwriting and Servicing (DUS) product line and/or our Negotiated Transactions (NT) MBS product line.
We pool multifamily loans that generally conform to our standards and issue Multifamily MBS backed by those loans. A Multifamily MBS may be backed by fixed-rate mortgage loans or adjustable-rate mortgage loans but will not be backed by both fixed-rate and adjustable-rate loans. When a Multifamily MBS is issued, we guarantee to the MBS trust that we will supplement amounts received by the trust as required to permit timely payment of principal and interest on the MBS certificates.
In addition to typical MBS, we issue Discount Mortgage-Backed Securities (DMBS), which are non-interest bearing securities that are purchased at a discount and have terms of one year or less.
Multifamily MBS may be placed into Megas, REMICs, or other Structured Transactions mortgage-related securities.
Additional data related to Multifamily MBS can be located via the tools on the right and via additional links outlined below:
Fannie Mae guarantees to each MBS trust that it will supplement amounts received by the trust as required to permit timely payments of principal and interest on the certificates.
Page originally pubished: December 21, 2011
Page last revised: January 9, 2019