Kattan: Only a select group of lenders, which are referred to as Delegated Underwriting and Servicing (DUS) lenders, are authorized to originate these types of loans. Much of the volume, however, comes through third-party mortgage brokers that package and shop the opportunity to find the best loan available amongst the DUS lenders, as not each one will do the exact same loan.

GlobeSt.com: How is the program faring since it got started in late 2014?

Siggins: It's truly hitting stride as it enters its third year. Lenders understand the process, borrowers are educated on the benefits, and brokers are familiar with the timelines to help manage through the transactions. The loans also are attracting a new group of buyers, ones that would not have come to the table previously due to this type of loan not being available.

Another reason why the program is becoming more widely used is because the loans do not count against the Fannie Mae/Freddie Mac overall cap on how much they can loan per year. Therefore, the lenders are motivated to get the product in front of consumers as they can grow their business more than the cap would allow for the larger loans. Freddie Mac is targeting total loan production of $5 billion alone for the SBL program in 2017.

How will industry regs impact commercial real estate investment? Get one opinion here. Then find out what one capital markets guru thinks about a possible lending volume decline.

ATLANTA—At a time when the capital markets are tightening in some sectors, multifamily developers and investors are exploring new ways to get deals done. Fannie Mae and Freddie Mac is offering an attractive opportunity to private investors.

Fannie Mae and Freddie Mac's small balance loan program is designed to target areas of the marketplace that lacked liquidity options and focuses on multifamily deals with a mortgage balance from $1 to $5 million. A combination of non-recourse, higher leverage points—up to 80%—and attractive rates have made the program a hit with buyers.

GlobeSt.com caught up with Darron Kattan and Casey Siggins of Franklin Street to get some insight into these instruments in part two of this exclusive interview. You can still read part one: Multifamily Private Investors Turning To New Financing Option.

GlobeSt.com: Who originates these loans? Any multifamily lender?

Kattan: Only a select group of lenders, which are referred to as Delegated Underwriting and Servicing (DUS) lenders, are authorized to originate these types of loans. Much of the volume, however, comes through third-party mortgage brokers that package and shop the opportunity to find the best loan available amongst the DUS lenders, as not each one will do the exact same loan.

GlobeSt.com: How is the program faring since it got started in late 2014?

Siggins: It's truly hitting stride as it enters its third year. Lenders understand the process, borrowers are educated on the benefits, and brokers are familiar with the timelines to help manage through the transactions. The loans also are attracting a new group of buyers, ones that would not have come to the table previously due to this type of loan not being available.

Another reason why the program is becoming more widely used is because the loans do not count against the Fannie Mae / Freddie Mac overall cap on how much they can loan per year. Therefore, the lenders are motivated to get the product in front of consumers as they can grow their business more than the cap would allow for the larger loans. Freddie Mac is targeting total loan production of $5 billion alone for the SBL program in 2017.

How will industry regs impact commercial real estate investment? Get one opinion here. Then find out what one capital markets guru thinks about a possible lending volume decline.