If a commercial loan holder has a long-term mortgage, there’s a high chance the loan was bought by Fannie Mae or Freddie Mac from a bank. These government-sponsored enterprises (GSE) don’t administer the loans, they provide lending and default protections to keep the real estate market stable. The professional team of agents at Howell Investment Finance in Ames, IA, have extensive experience with Fannie Mae and Freddie Mac loans, as well as providing clients expert guidance on which mortgage is the best fit.

There are several key differences between the two GSEs. Below is a brief overview of their distinctions.

Freddie Mac

This GSE buys mortgages from smaller banks known as thrifts. Once the loans are purchased, Freddie Mac bundles them so they are available to be sold on the secondary mortgage market. This means an approved Freddie Mac lender can provide the financing for the commercial loan to borrowers who meet the GSE’s guidelines.

Freddie Mac can either purchase the loan back after the borrower closes on the transaction, or keep the loan and bundle it with other commercial loans that have similar terms. A bundled loan can also be sold to potential investors. Depending on the commercial loan’s structure, an insurance policy is typically included to protect against borrower default.

Fannie Mae

Fannie Mae buys mortgages from larger, national banks, as well as credit unions and community banks. The GSE’s main goal is to make commercial lending affordable to investors who may not have sufficient capital to buy investment properties such as apartment mortgage loans.

A Fannie Mae loan typically has lower down payment and income requirements. Depending on the loan program, borrowers may also be eligible for better terms based on the location of the commercial property. There may also be additional features that provide relief to borrowers with less-than-stellar credit.  

Knowing whether a Freddie Mac or Fannie Mae commercial loan is ideal starts by talking with a loan officer who has an in-depth knowledge of the GSEs’ programs. A number of factors are reviewed to determine which loan will meet the borrower’s unique investment property goals and needs.

To learn more about Freddie Mac and Fannie Mae commercial loans, call Howell Investment Finance at (515) 233-8228 to arrange a complimentary consultation. A friendly and knowledgeable loan officer will go over the fine print and answer all of your questions. In addition to Ames, this trusted company serves Des Moines, West Des Moines, Ankeny, and Cedar Rapids. Visit the website for more information on their commercial loan options.