Fannie Mae DUS (Delegated Underwriting and Servicing) is Fannie Mae’s flagship multifamily lending program. Approved lender partners originate, underwrite, and service conventional multifamily mortgage loans under delegated authority, making the credit decision themselves within Fannie Mae’s guidelines and retaining a share of any losses, while the loans carry the pricing benefit of Fannie Mae’s guarantee.
How does a DUS loan work?
The DUS lender, not Fannie Mae, makes the credit decision, within Fannie Mae’s underwriting guidelines. In exchange the lender shares in the credit risk by retaining a portion of any losses, typically one-third. DUS loans are typically 7- to 15-year fixed-rate loans with 30-year amortization, priced competitively because they are backed by Fannie Mae’s government-sponsored enterprise (GSE) guarantee. They are available for stabilized multifamily properties with five or more units and are one of the most cost-effective sources of long-term multifamily debt.
What do DUS loans require of the borrower?
The terms are attractive: low rates, leverage up to 80% LTV, long amortization, and flexible prepayment options including yield maintenance and declining prepayment premiums. In return, DUS loans carry a minimum DSCR, typically 1.25x, occupancy requirements at closing, and ongoing reporting obligations.
Underwriting is more standardized than a bank loan: more predictability, less flexibility for unusual situations. DUS lenders vary significantly in execution quality, pricing, and willingness to push Fannie Mae’s guidelines, and the lender services the loan for its entire term, so choosing one means choosing a long-term partner.
How Fannie Mae DUS loans show up in LoanBoss
LoanBoss reflects every agency prepayment convention, including the rate lookback, re-amortizes agency floaters monthly on the floating reset, and tracks escrows, hedge requirements with live MtM and replacement cap costs, supplementals, and repair schedules, with a real-time SREO in agency conventions.
Frequently Asked Questions
What does “delegated” mean in Fannie Mae DUS?
The approved DUS lender makes the credit decision itself, within Fannie Mae’s underwriting guidelines, and in exchange retains a portion of any losses, typically one-third.
What are typical Fannie Mae DUS loan terms?
Fixed-rate loans of 7 to 15 years with 30-year amortization, leverage up to 80% LTV, a minimum DSCR of typically 1.25x, and prepayment through yield maintenance or declining premiums.
Who services a DUS loan?
The DUS lender that originated it, for the entire term of the loan. The lender relationship lasts as long as the debt does.
Related Terms
- Freddie Mac SBL
- Floating Rate
- Interest Rate Cap
- Loan-to-Value
- Debt Service Coverage Ratio
- Managing Agency Loans (Fannie Mae and Freddie Mac): What to Track Beyond the Note
Part of the LoanBoss CRE Debt Glossary. For hedging-specific terms, see Pensford’s resources.
Sources
- LoanBoss CRE Debt Glossary