The two most compelling benefits of Agency loans are as follows:
Most Agency loans are non-recourse (no personal guarantees)
Agency loans allow for unrestricted cash out on refinances in which the new agency loan amount is greater than the loan balance being paid off
Agency loans are conventional fixed-rate, first mortgage loans secured by stabilized income-producing multifamily and manufactured housing communities that meet Fannie Mae and/or Freddie Mac underwriting guidelines.
Agency loans can be fixed or floating rate, fixed-rate loans have a 5-, 7- or 10-year loan term. The term can be extended to 20 years with a rate reset after the initial fixed-rate period. Agency loans amortize on long 25- or 30-year schedules and can have interest-only payments during the first few years of the loan term.
Agency loans have lower transaction costs than CMBS loans and are competitive with commercial bank loans. In addition, agency loans have more prepayment options than CMBS loans, including declining “step-down” options similar to commercial bank loans.
