What is a Fannie Mae MTEB?

What is a Fannie Mae MTEB?

The Fannie Mae MTEB, or MBS as Tax-Exempt Bond Collateral, is a financing option provided by Fannie Mae for multifamily affordable housing properties. It allows these properties to use a Fannie Mae Multifamily Mortgage-Backed Security (MBS) as collateral to credit enhance either existing fixed-rate bond refundings or new fixed-rate bond issues in conjunction with 4% Low-Income Housing Tax Credits (LIHTC). This program offers benefits such as faster closings through a unique delegated model, various prepayment options including declining prepayment or yield maintenance, and the possibility for interest-only payments. The MBS ensures a direct passthrough of principal and interest payments, making it more attractive to bond buyers.

Eligibility for the program includes multifamily affordable housing properties that are underwritten to Fannie Mae Guide Requirements for tax-exempt bonds, with terms ranging from 10 to 30 years and amortization up to 35 years. Maximum loan-to-value ratios and minimum debt service coverage ratios vary depending on the proportion of units meeting affordability requirements or if the financing is for re-fundings. Specific requirements also apply for issuer and trustee fees, prepayment options, bond payments, and the tax-exempt to taxable conversion feature, among others