Regions Bank (RF) Joins Fannie Mae (FNMA) DUS Lenders Network
Regions Financial Corporation’s (RF) core banking subsidiary, Regions Bank, now stands listed among the 24 Fannie Mae Delegated Underwriting and Servicing (‘DUS’) lenders. The company also acquired a DUS servicing portfolio of around $1 billion. The terms and conditions of the agreement were not disclosed.
The Fannie Mae DUS program – the flagship program of Federal National Mortgage Association (FNMA) – was introduced in 1988 to enhance and maintain product standardization in the multifamily housing industry. Fannie Mae along with its lender partners provides liquidity to the multifamily housing market through this program. It has provided liquidity of over $300 billion in the mortgage market to finance more than 6.3 million units of multifamily housing since the inception of the program.
The lenders in the DUS network are authorized to underwrite, close and deliver most loans without Fannie Mae’s pre-review. The business model calls for a risk sharing feature. As the DUS lenders (which mainly include financial institutions and independent mortgage lenders) are well capitalized companies, these share risk of loss over the life of the loan. Wells Fargo Multifamily Capital – an arm of Wells Fargo & Company (WFC) and JPMorgan Chase & Co. (JPM) are among the other partners in the DUS network.
Regions has a decent presence in the real estate, commercial as well as capital markets. The latest approval will further aid this Alabama-based regional bank’s expansion strategies. It will enable the bank to provide effective financing solution to support multifamily housing client base. The company views multifamily housing as a promising sector of the real estate market. We believe the company is poised to benefit from the improving housing market.
Regions recently reported second-quarter 2014 results with earnings from continuing operations of 21 cents per share, up 16.7 % year over year. A strong capital position, reduced non-interest expenses and increase in loans and deposits were the positives for the quarter. However, lower top line was on the flip side.
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