Definition: A type of mortgage loan in which the lenders remedies in the event of borrower default are unlimited, extending beyond the property to the borrowers personal assets.
A Commercial Mortgage-Backed Securities (CMBS or conduit) mortgage is a fixed-rate, non-recourse loan product that uses flexible underwriting standards and larger commercial real estate properties as collateral. Several of these mortgages are pooled together, securitized into bonds, and sold to investors. However, this doesn’t affect the borrower; the loan is serviced similarly to any other loan product. Loan Features / Character
A Fannie Mae (“Fannie Mae” or FNMA) mortgage is a loan product for apartment buildings with 5+ units. These loans can be fixed or floating and are generally non-recourse. It is a great product for various multifamily property types, including conventional apartments, affordable housing, senior housing, student housing, cooperative housing, and manufactured housing. It can also be used for mixed-use buildings where the other commercial units make up 20% or less of the gross income. Fannie Mae loans are only available for experienced multifamily investor/managers.
Apartment FHA Loans and healthcare loans. Up to 90% LTV, non-recourse and low rates. HUD - FHA mortgages available nationwide
Since its inception, CMBS lending has been the go-to mortgage product for larger properties with sponsors that want non-recourse financing with high leverage, low interest rates, and lenient underwriting. However, since the market collapse in 2007 and the passage of the Dodd-Frank “Risk Retention”, things have changed. Although still more permissive than conventional or insurance products, CMBS underwriting standards have become more stringent, leverage points have been lowered, and interest rates can fluctuate greatly depending on treasury indexes and bond investor demands.
The Federal Housing Administration (FHA) Division of the US Department of Housing and Urban Development (HUD) offers government-insured loans for multifamily properties with experienced (and patient! ) investor/owners. It also offers loans for healthcare facilities (i. e. hospitals and residential care facilities) as well as special needs facilities for the elderly or disabled. Although FHA apartment loans have longer closing times and higher fees than any other mainstream multifamily product, this is a strong go-to product for long-term investors with large loan requests because of the long fixed term and amortization, non-recourse structure, low interest rates, and high leverage point.
