Multifamily Lender Memo 08-10

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					                                                    Product Development

                                                              Refi Plus



Date:           May 22, 2008

To:             Fannie Mae DUS® Lenders

From:           Manuel Menendez, Vice President, Product Development and Business
                Management

Subject:        Lender Memo 08-10, Refi PlusTM




                                    Highlights
  Fannie Mae announces Refi PlusTM, a portfolio retention tool that will enable
  Lenders to lock in the refinance of existing Fannie Mae DUS Mortgage Loans up to
  24 months in advance of the Prepayment Period End Date and capture increases in
  value immediately with a Supplemental Mortgage Loan.

          Refi Plus structure: The product is comprised of two Mortgage Loans:
               o Refi Plus Refinance Mortgage Loan: Uses the Cash Early Rate Lock
                    (ERL) Full Underwriting Commitment option to rate lock the refinance
                    proceeds; and
               o Supplemental Mortgage Loan: A Mortgage Loan that is funded
                    immediately using a standard commitment.
          Eligibility:
               o Existing Cash or MBS Mortgage Loans meeting the eligibility
                    requirements for Choice Refinance Loans.
          Low Cost Execution:
               o A Mortgage Spreader Agreement is executed in lieu of posting cash or
                    a letter of credit to secure the Good Faith Deposits; and
               o The streamlined underwriting used reduces the Borrower’s transaction
                    costs.




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  Additional revisions are also being made to the Multifamily Guides and Forms as
  follows:

               o The DUS Cash Early Rate Lock (Cash ERL) Commitment option has
                 been updated and the Pair-off and Default Fee calculations have been
                 revised to align with the standard Yield Maintenance methodology.
               o The Multiple Asset Transaction Early Rate Lock (MATS ERL) Pair-off
                 and Default Fees have been updated to reflect similar changes.
               o Supplemental Mortgage Loan revisions have been made to clarify the
                 requirements for Coterminous Supplemental Mortgage Loans and the
                 required minimum Mortgage Loan term.



Fannie Mae is pleased to announce Refi PlusTM, a refinance tool that Lenders may use
to retain high quality Mortgage Loans. Refi Plus provides certainty of execution to
Borrowers by enabling them to (1) lock the interest rate on the refinance of their existing
Fannie Mae DUS Mortgage Loan up to two years prior to the Prepayment Period End
Date and (2) obtain additional funds immediately through the placement of a
Supplemental Mortgage Loan on the Property.

Benefits to the Borrower

The Borrower benefits in several ways:

    1. The Borrower receives cash out immediately in the form of a Supplemental
       Mortgage Loan that will be coterminous with the Refi Plus Refinance Mortgage
       Loan. The Supplemental Mortgage Loan and Refi Plus Refinance Mortgage
       Loan that comprise Refi Plus both receive 1st lien pricing;
    2. The interest rate for the Refi Plus Refinance Mortgage Loan is locked
       simultaneously with the Supplemental Mortgage Loan, eliminating balloon risk on
       the existing Mortgage Loan and the uncertainty about future rates. As indicated,
       the Refi Plus Refinance Mortgage Loan rate lock can occur up to two years prior
       to the Prepayment Period End Date of the existing Mortgage Loan using the
       Cash ERL feature;
    3. The Borrower will not pay a prepayment premium on the existing Mortgage Loan
       by refinancing with Refi Plus;
    4. The Borrower is not required to post cash or a letter of credit as a Good Faith
       Deposit. In lieu of a Good Faith Deposit, the Borrower is required to execute a
       Mortgage Spreader Agreement to secure non-delivery damages; and
    5. Refi Plus uses the Choice Refinance Loan streamlined underwriting process
       which may result in lower processing costs.




Lender Memo 08-10                        2
Eligibility

Refi Plus Mortgage Loans are subject to the same eligibility requirements as Choice
Refinance Loans as described in Part IIIC, Section 302 of the Multifamily Selling and
Servicing Guide. Briefly, Fannie Mae DUS Mortgage Loans that are in the Lender’s
servicing portfolio are eligible to be refinanced using Choice Refinance Loan
streamlined underwriting if the Property securing the Mortgage Loans (i) is well
maintained, (ii) has a stable operating history and (iii) is able to refinance at the
minimum Tier 2 standards for Baseline DSCR, Underwritten DSCR and LTV.

Rate locks for Choice Refinance Loans without a Supplemental Mortgage Loan are not
considered Refi Plus Mortgage Loans.

Ineligible Mortgage Loans

Micro Loans meeting the definition of Part IIIB, Chapter 10 of the Multifamily Selling and
Servicing Guide are not eligible for Refi Plus.

Execution

       Existing Mortgage Loan: The Mortgage Loan being refinanced may be a Cash
        or MBS execution;
       New Refi Plus Mortgage Loans: The Supplemental Mortgage Loan and Refi
        Plus Refinance Mortgage Loan must both utilize a Cash execution.

Mortgage Loan Terms

The Refi Plus Refinance Mortgage Loan and the Supplemental Mortgage Loan must
each have a term of not less than five years and must mature at the same time.

Prepayment Terms

The standard prepayment types available for Fixed Rate Mortgage Loans are also
available for Refi Plus Mortgage Loans. The Supplemental Mortgage Loan and the Refi
Plus Refinance Mortgage Loan must have the same prepayment type and the same
Prepayment Period End Date.

Prepayment Premiums on Existing Mortgage Loan

Fannie Mae will waive collection of the 1% prepayment premium otherwise due after
the Prepayment Period End Date if the existing Mortgage Loan is refinanced utilizing
Refi Plus.




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Underwriting Requirements

Refi Plus Mortgage Loans generally may be underwritten using the Choice Refinance
guidelines that permit the Lender to take a streamlined approach to the underwriting,
due diligence and documentation that are typically required for a newly originated
Mortgage Loan. Refi Plus, however, requires that the Lender obtain a new appraisal in
all cases.

The underwriting for both the Supplemental Mortgage Loan and Refi Plus Refinance
Mortgage Loan must be completed prior to the Lender’s request for commitments under
Refi Plus.

Small Mortgage Loans: Small Mortgage Loans meeting the definition of Part IIIB,
Chapter 9 of the Multifamily Selling and Servicing Guide must be underwritten
according to the requirements of that Chapter and the Multifamily Underwriting
Standards for Small Mortgage Loans. For purposes of determining whether the Refi
Plus Mortgage Loans meet the Small Mortgage Loan criteria, the combined principal
amount of the Supplemental Mortgage Loan and Refi Plus Refinance Mortgage Loan
must be used. Small Mortgage Loans must also meet the following additional
requirements:
    Net Worth Requirement: To determine the acceptability of the Borrower’s net
       worth, the combined principal amount of the Supplemental Mortgage Loan and
       Refi Plus Refinance Mortgage Loan must be used.
    Liquidity Requirement: If the ERL Commitment Period of the Refi Plus
       Refinance Loan is greater than six (6) months, the combined liquid assets of the
       Borrower and all Key Principals must be equal to or greater than the number of
       months of the ERL Commitment Period multiplied by the monthly debt service
       payment amount to be paid during that period for the existing Mortgage Loan
       and the Supplemental Mortgage Loan.

Mortgage Loan Sizing:

The Refi Plus Mortgage Loans will be sized together and must meet all Baseline DSCR,
Underwritten DSCR and LTV requirements as stated in the Multifamily Underwriting
Standards (Form 4660) on a combined basis. The proceeds for the Supplemental
Mortgage Loan will be the difference between the total amount of debt for which the
Property qualifies less the amount of the Refi Plus Refinance Mortgage Loan, subject to
the limitations described below.

        If the existing Mortgage Loan is a Cash Conventional Mortgage Loan:
             Prior to the refinance of the existing Mortgage Loan (i.e. during the DUS
                Cash ERL Commitment Period for the Refi Plus Refinance Mortgage
                Loan), the combined DSCR of the Supplemental Mortgage Loan and the
                existing Mortgage Loan may be up to 0.10 less than the then applicable
                Baseline and Underwritten DSCR requirements set forth in the Multifamily
                Underwriting Standards (Form 4660). For example, if the applicable


Lender Memo 08-10                       4
                Baseline and Underwritten DSCR is 1.20/1.25, the combined DSCR of the
                Supplemental Mortgage Loan and the existing Mortgage Loan may be
                1.10/1.15 prior to the refinance of the existing Mortgage Loan; and
               If the Supplemental Mortgage Loan is sized using the combined reduction
                (up to 0.10) to the applicable Baseline and Underwritten DSCR
                requirements, the Supplemental Mortgage Loan must be structured as an
                interest only Mortgage Loan during the Cash ERL Commitment Period of
                the Refi Plus Refinance Mortgage Loan. Upon funding of the Refi Plus
                Refinance Mortgage Loan, the Supplemental Mortgage Loan shall
                amortize on the same basis as the Refi Plus Refinance Mortgage Loan.

        If the existing Mortgage Loan is a MBS/DUS Conventional Mortgage Loan:
             Prior to the refinance of the existing Mortgage Loan (i.e. during the Cash
                ERL Commitment Period for the Refi Plus Refinance Mortgage Loan), the
                combined Underwritten DSCR of the Supplemental Mortgage Loan and
                the existing Mortgage Loan shall not be less than:
                 1.25 Underwritten DSCR for Tier 2 Mortgage Loans;
                 1.35 Underwritten DSCR for Tier 3 Mortgage Loans; or
                 1.55 Underwritten DSCR for Tier 4 Mortgage Loans.

        If the existing MBS Mortgage Loan is designated as Tier drop eligible, the
        minimum Tier drop requirements set forth in the MBS disclosure apply.

If the size of the Supplemental Mortgage Loan is reduced due to the limitations
described above, the reduction in proceeds may be rate locked as part of the Cash ERL
Commitment for the Refi Plus Refinance Mortgage Loan. However, the total proceeds
may not exceed the amount that enables the Refi Plus Mortgage Loans to meet the
minimum Baseline and Underwriting DSCR and LTV requirements for the applicable
Tier.

Delivery Test

A test of the actual cash rental collections prior to delivery is not required for the Refi
Plus Refinance Mortgage Loan.

Dual Rate Locks

If the Lender determines that the Property is eligible for additional proceeds at the time
of funding the Refi Plus Refinance Mortgage Loan, the Borrower may use the Dual DUS
Commitment option to rate lock the additional proceeds.

Additional Supplemental Mortgage Loans

Additional Supplemental Mortgage Loans may be placed on the property following the
closing of the Refi Plus Refinance Mortgage Loan subject to the requirements of Part
IIIC, Chapter 2 of the Multifamily Selling and Servicing Guide. The Supplemental


Lender Memo 08-10                        5
Mortgage Loan that is part of the Refi Plus transaction does not count toward the
maximum number of Supplemental Mortgage Loans that are permitted.

Committing and Delivery

Commitment timing: The Supplemental Mortgage Loan and the Refi Plus Refinance
Mortgage Loan must be rate locked simultaneously to be eligible for Refi Plus pricing.

Rate Lock: The Lender must indicate that the Mortgage Loans will use Refi Plus at the
time that the Live Pricing Commitments are locked with the Whole Loan Desk. The
Supplemental Mortgage Loan will be an immediate delivery and the Refinance
Mortgage Loan will use the Cash Early Rate Lock (ERL) Full Underwriting option. The
Lender must ensure that the commitment expiration date of the Refi Plus Refinance
Mortgage Loan occurs after the Prepayment Period End Date of the Mortgage Loan
being refinanced.

As a condition to the Lender obtaining a commitment for a Refi Plus transaction, the
Borrower must have executed the Cash Early Rate Lock Borrower Certification (Refi
Plus), Form 4571 (the “Refi Plus Borrower Certificate”).

Good Faith Deposits: Non-delivery of the Supplemental Mortgage Loan and Refi Plus
Refinance Mortgage Loan must be secured by the Refi Plus Mortgage Spreader
Agreement (Form 4568-RP).      This form is attached and will be posted on
efanniemae.com. No Good Faith Deposit is required to be collected for Refi Plus
Mortgage Loans.

C&D: When entering the commitment in the Multifamily Committing and Delivery
application (C&D), the Lender must follow the instructions provided in the attached Refi
Plus Committing and Delivery Job Aid to ensure that the Refi Plus Mortgage Loans are
identified and certified correctly prior to funding. To summarize:
    Both commitments must be entered under the same Deal ID;
    Both commitments must be associated to the same Property collateral;
    At delivery, the Supplemental Mortgage Loan must be identified by checking the
        Refi Plus box on the Loan page of C&D.

Folder III/MultiDocs Delivery: The underwriting file must be delivered for both Refi
Plus Mortgage Loans in accordance with the standard requirements.

Mortgage Loan Documents

Refi Plus uses the standard documents for Fannie Mae Mortgage Loans applicable to
Choice Refinance Loans, along with the following:

Existing Mortgage Loan:
    Modification to Multifamily Mortgage, Assignment of Rents and Security
       Agreement and Spreader Agreement (the “Spreader”), Form 4568-RP.



Lender Memo 08-10                       6
Supplemental Mortgage Loan:
   Modification to Instrument (Supplemental Lien-Refi Plus), Form 4063-A; and
   Multifamily Partial Interest Only Fixed Rate Note (Form 4100 PIO series)
     (Supplemental Lien – Refi Plus) (required if the Supplemental Mortgage Loan is
     partial interest only).

Refi Plus Refinance Mortgage Loan:
    Modification to Instrument (First Lien – Refi Plus), Form 4080.

DUS Cash Early Rate Lock (Cash ERL) and MATS ERL Revisions

Revisions have been made to the DUS Cash ERL to revise terminology and align the
Pair-off and Default Fee calculations with the standard Yield Maintenance methodology
used in the Fannie Mae forms of Multifamily Note. The following revisions have been
made:
    Revisions to the ERL terminology: going forward, ERL will mean “Early Rate
       Lock” and references to “Extended Rate Lock” have been removed;
    The calculations for the Pair-off Fee and Default Fee have been revised as
       follows:
           o The Pair-off fee formula has been updated to reflect the current Fannie
               Mae One Quote process; and
           o The term used in the present value factor will be calculated in months
               instead of years, and the computation period will now be based on the
               Yield Maintenance term, instead of the term of the Mortgage Loan.
    Revised versions of the DUS Cash Early Rate Lock Borrower Certification (Full
       and Preliminary Underwriting) and MATS Early Rate Lock Agreement and
       Certification are attached.

Supplemental Mortgage Loan Revisions

The Multifamily Selling and Servicing Guide, Part IIIC, Chapter 2 has been revised as
follows:

       The definition of Coterminous Supplemental Mortgage Loans has been clarified
        by removing the reference to the five year term of the Pre-existing Mortgage
        Loan.
       The requirements for the minimum term of the Supplemental Mortgage Loan
        have been clarified as follows:
           o For Pre-existing Mortgage Loans with a balloon payment at maturity,
              the Supplemental Mortgage Loan shall not mature prior to the latest
              maturity date of any Pre-existing Mortgage Loan; and
           o For fully amortizing Pre-existing Mortgage Loans, the Supplemental
              Mortgage Loan must mature on or after the latest Prepayment Period End
              Date of any Pre-existing Mortgage Loan.




Lender Memo 08-10                      7
Effective Date

This Lender Memo is effective immediately.

Training

Refi Plus training will be conducted by conference call on June 4, 2008 at 2:00 PM
(EST). Training materials and dial-in information will be distributed prior to the call.

Questions

Questions about Refi Plus may be addressed to Nancy Atwell at (301)204-8495 or by e-
mail at nancy_atwell@fanniemae.com, or Derrick Lindsey at (301)204-8160 or by e-
mail at derrick_m_lindsey@fanniemae.com, or your Deal Team.

Attachments:

    1.  Refi Plus Term Sheet
    2.  Cash Early Rate Lock Borrower Certification (Refi Plus), Form 4571
    3.  Modification to Instrument, Form 4063-A (Blackline)
    4.  Modification to Instrument (Supplemental Lien-Refi Plus), Form 4063-A (Final)
    5.  Modification to Multifamily [Deed of Trust][Mortgage][Deed to Secure Debt],
        Assignment of Rents and Security Agreement and Spreader Agreement, Form
        4568-RP
    6. Mortgage Loan Delivery Table of Contents, Form 4517
    7. Multifamily Selling and Servicing Guide, Part IIIC (Blackline)
    8. Multifamily Selling and Servicing Guide, Part IIIC (Final)
    9. DUS Guide, Part IV, Chapter 2 (Blackline)
    10. DUS Guide, Part IV, Chapter 2 (Final)
    11. DUS Guide, Part IV, Chapter 5 (Blackline)
    12. DUS Guide, Part IV, Chapter 5 (Final)
    13. Refi Plus Committing and Delivery (C&D) Job Aid
    14. DUS Cash Early Rate Lock (ERL) Borrower Certification (Full Underwriting Prior
        to Rate Lock), Form 4580-A (Blackline)
    15. DUS Cash Early Rate Lock (ERL) Borrower Certification (Full Underwriting Prior
        to Rate Lock), Form 4580-A (Final)
    16. DUS Cash Early Rate Lock (ERL) Borrower Certification (Preliminary
        Underwriting Prior to Rate Lock), Form 4580 (Blackline)
    17. DUS Cash Early Rate Lock (ERL) Borrower Certification (Preliminary
        Underwriting Prior to Rate Lock), Form 4580 (Final)
    18. MATS Early Rate Lock Agreement and Certification, Form 4570 (Blackline)
    19. MATS Early Rate Lock Agreement and Certification, Form 4570 (Final)
    20. DUS Cash Early Rate Lock Term Sheet




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