Regions Financial Corporation
) 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
The Fannie Mae DUS program - the flagship program of Federal
National Mortgage Association (
) - 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 (
) and JPMorgan Chase & Co. (
) 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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