New Fannie Mae incentive updates benefit multifamily builders
The Federal National Mortgage Association, commonly known as Fannie Mae, has made several updates to the government-sponsored lending program that are aimed at assisting those involved in multifamily projects across the country.
Fannie Mae gives preferential pricing for all green loans, reducing the fixed interest rate of a multifamily refinance, acquisition or supplemental mortgage loan. For example, as of May 26, 2016, a $10 million conventional green loan would receive an interest rate that is 33 basis points (0.33 percent) lower than a comparable non-green loan. The amount of the interest rate reduction varies based on the size and credit quality of the loan and may change over time but can be as high as 40 basis points.
Green Globes-certified buildings with lower operating costs and better indoor environmental quality are more attractive to a growing group of tenants and individual buyers. High-performing building features increasingly enter into tenants' decisions about leasing space and lead to higher occupancy rates and increased demand. In addition to operational perks, McGraw Hill research has found that green projects have an increased building value over non-green projects of 5 percent for new construction and 5 percent for remodels.
The Green Building Initiative (GBI) approach to certification is flexible and therefore applicable to multi-family buildings, including those completed and occupied within the last 18 months and/or those with at least 12 months of operational data. When compared to other rating systems, Green Globes has a much lower cost of entry and a faster turnaround time for certification.
GBI provides support mechanisms to help building owners complete the certification process, such as qualified Green Globes professionals, GBI project managers and technical advisers.
Steps to capture the Fannie Mae benefits of a green building certification
1. Verify that the property has earned Green Globes certification.
2. Upload a copy of the Green Globes certificate to the DUS Gateway prior to rate lock. Fannie Mae’s green financing team will confirm receipt of the certificate in Chatter.
3. Receive preferential pricing. Build equity faster and pay less interest with a lower interest rate.