FirstKey announces expanded single-family rental loan program

Targeting investors seeking loans of up to $5 million

FirstKey is expanding its loan options for single-family rental investors.

FirstKey’s Express program, which was initially launched in December 2013, is adding the option of a 30-year fixed-rate term with no pre-payment penalty to portfolio owners seeking loans up to $5 million, with no restriction on the number of properties financed, the company said.

“The flexibility of a 30-year fixed-rate, pre-payable loan protects investors from balloon risk and rising interest rates while still providing them the ability to pay loans off before the end of the term with no penalty,” FirstKey said in a release.

“These benefits have not previously been available to landlords with small- to mid-sized portfolios of homes.”

FirstKey is a subsidiary of FirstKey Holdings, which is indirectly majority-owned by funds managed by Cerberus Capital Management.

The company also announced that it lowered its minimum qualifying portfolio loan amount to $150,000.

The company now offers various programs for single-family rental investors, including:

Express Single Property Loans: Individual loans of $75,000 to $1 million per property, depending on the number of units. These 30-year, fully amortizing, fixed rate loans have no prepayment penalties.

Express Portfolio Loans: Fixed rate loans of $150,000 to $5 million on portfolios of five or more properties with two options: 5 or 10-year balloon loans, and 30-year, fully amortizing loans with no payment penalties.

Premier Fixed Rate Loans: Portfolio loans of $5,000,000 to $500 million on portfolios of five or more properties. These five-, seven- and 10-year loans are fixed rate and non-recourse.

Premier Bridge Loans: Loans of $10,000,000 to $500 million for up to 12 months. These bridge loans are offered at a floating rate with both recourse and non-recourse options available.

Fix & Flip: Loans from $75,000 to $1,000,000 for rehab projects. These loans have a fixed rate for up to 12 months.

"Our enhanced Express product is unlike anything else in the market today. The enthusiastic response to the Express single property loan made it clear that term and pre-payment flexibility are often a critical feature for entrepreneurial investors who cannot always predict how their financing needs might change over time. We are proud to continue innovating for our customers," said Randy Reiff, FirstKey Lending’s chief executive officer.

"Whether you're a SFR entrepreneur or an institutional borrower, our product suite can provide a solution that meets your investment goals.

FirstKey also broke into the jumbo mortgage securitzation market recently, with the launch of its first jumbo RMBS, which was built on 401 first-lien, jumbo residential mortgage loans with an aggregate outstanding principal balance of $285,984,195.

The pool’s average loan balance is $713,178 and the underlying borrowers carry a weighted average original FICO score of 767. The pool’s weighted average coupon is 4.319%, the weighted average loan-to-value ratio is 70.4% and the weighted average debt-to-income ratio is 33%.

DBRSKroll Bond Rating Agency, and Fitch Ratings have all issued presale reports for the FirstKey offering and awarded AAA ratings to the offering’s largest class, citing the high quality of the borrower pool as a positive of the deal.

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