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""Fannie Mae"":http://www.fanniemae.com/ announced Tuesday it has launched a multifamily mortgage-backed securities system called Fannie Mae Guaranteed Multifamily Structures, or Fannie Mae GeMS, that will include Delegated Underwriting and Servicing (DUS) Megas, DUS REMICs, and syndicated DUS Megas.
[IMAGE]According to Fannie Mae's Web site, a DUS is ""an MBS option that provides prepayment protection to investors. The DUS MBS offers competitive yields and liquidity, as well.""
The Megas option allows investors to invest in large pools of multifamily MBS backed by smaller pools of MBS called Mega. Syndicated Mega deals are managed by broker-dealers and offered in small issuance sizes.
[COLUMN_BREAK]A REMIC, which stands for Real Estate Mortgage Investment Conduit, is a type of multiclass mortgage-related security in which interest and principal payments from mortgages are structured into separately traded securities.
Fannie Mae GeMS securities will expand the MBS products already offered within Fannie Mae's Multifamily DUS program. Fannie Mae revitalized its multifamily MBS program in 2009, increasing issuance and using the company's portfolio to enhance liquidity for multifamily MBS products.
""Fannie Mae is a leading provider of capital and liquidity for affordable workforce rental housing, and our role is more important now than ever,"" said Kenneth J. Bacon, EVP, Multifamily Mortgage Business. ""When many financial institutions pulled out of the multifamily financing market during the financial crisis, we stayed and increased our participation to help keep credit flowing.""
The majority of DUS MBS are backed by a single loan on a multifamily property. Typical deal terms are:
* $5-10 million loan size
* 10-year balloon term with 9.5 years of call protection
* 30-year amortization
* 80% loan-to-value ratio
* 1.25x debt service coverage ratio
Last year Fannie Mae issued $4.8 billion in DUS structured securities and $16.4 billion in DUS mortgage backed securities.
