Fannie Mae M.TEB Financing

Fannie Mae Issued Taxable and Tax-Exempt Bonds for Financing the Rehabilitation of Affordable Multifamily Developments

Financing the rehabilitation of Multifamily Affordable Housing (MAH) properties usually leaves investors in need of more than the typical Fannie Mae Apartment loans. For many investors, the Fannie Mae MBS as Tax-Exempt Bond Collateral (M.TEB) is becoming an increasingly popular option. This financing vehicle allows for incredibly attractive LTV allowances of up to 90% and interest-only loan options, making it a flexible and affordable option for many investors. Additionally, M.TEB execution is available for both existing bond refunding and new bond issues for properties using 4% Low-Income Housing Tax Credits (LIHTCs) and even 80-20s (deals in which 20% of the property is set aside for low-income residents).

2021 Sample Fannie Mae Terms For MBS as Tax-Exempt Bond Collateral (M.TEB)

Size: No minimum or maximum loan size

Terms: 10-30 years

Amortization: Up to 35 years

Interest Rates: Fixed, variable-rate, and interest-only loan options available

Maximum LTV: Up to 90%

Minimum DSCR: 1.00x for Structured ARM, 1.15x for fixed-rate

Prepayment Penalty: Yield maintenance and declining prepayment premium options available

Eligible Properties:

  • 4% LIHTC Properties
  • 80-20s (deals in which 20% of the property is set aside for low-income residents)
  • Refunding of existing bonds

Advantages:

  • Competitive interest rates (typically 0.20-0.25% better pricing than regular bond credit enhancement)
  • Up to 90% LTV allowance
  • Up to 35-year amortization
  • Interest-only options
  • Flexible structure and certainty of execution
  • Wide investor base
  • Tax-exempt or taxable interest allowed