MyNewPlace Blog

From this morning's National Apartment Association's Industry Insider newsletter, we learned that $18.2 billion of Fannie Mae's total investment ($20 billion) in the apartment rental market for the first half of the year had been provided through its Designated Underwriting and Servicing (DUS) lenders. This record breaking figure is an increase of 30 percent over last year.

Some details on how Fannie Mae is investing in the multifamily industry and in apartments for rent:

• $5 billion in Small Loans, which are loans up to $3 or $5 million, depending on the market
• $1.5 billion in Seniors Housing
• $264 million in Student Housing
• $458 million in Manufactured Housing

A Designated Underwriting and Servicing lender or DUS is one of about 25 banks that underwrite, close and deliver multifamily loans that are guaranteed by Fannie Mae without their review. In the worst case scenario, a total default where no losses are recouped, a DUS lender would only be liable for 17.5 percent of the loan.

A list of DUS lenders is available here.

Fannie Mae guarantees the securities issued by the DUS lenders to investors (backed by the mortgage), thereby enhancing the value of the security to an investor. As a result, the DUS lender is able to provide loans that include an attractive interest rate to the borrower, in this case, apartment management companies.

This system allows for Fannie Mae to be able to extend credit and provide liquidity for the apartment rentals market, which in turn, keeps rental rates for households that rent apartments more affordable.

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