Fannie Mae Will No Longer Securitize Discount Mortgage Backed Securities

Fannie Mae issued an update to its Multifamily Guide providing that it will no longer securitize Discount Mortgage Backed Securities (DMBS) and will not purchase DMBS loans.

DMBS are non-interest bearing securities that are purchased at a discount and then repaid at par upon maturity.  They generally have terms of three months.

Fannie Mae fully deleted the portions of its Multifamily Guide which address DMBS, and noted that to the extent references to DMBS can be found in other areas of the guide, those provisions are inoperative.

This change becomes effective on December 4, 2018.