2003.03C

Third-Party Reports

Requirements

If you and the construction lender use a single set of third-party reports for underwriting, the reports 

  • must be addressed to both lenders, but
  • can be contracted and paid for by either lender.

Operating Procedures

You must obtain the following reports.

Report Timing You must...
Property Condition Assessment Before Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. Complete a PCAPCAAssessment of the Property's physical condition and historical operation. for all substantial rehabilitation properties.
Before conversion Obtain a PCAPCAAssessment of the Property's physical condition and historical operation. and complete the Replacement Reserve ScheduleReplacement Reserve ScheduleThe Required Replacement Schedule to the Multifamily Loan Agreement (Form 6001 series) and the applicable parts of the Multifamily Loan Agreement (or other agreement approved by Fannie Mae), that evidence the: Borrower’s agreement to replace identified capital items and perform required… per Part II, Chapter 4: Inspections and Reserves.
Environmental Site Assessment Before construction Obtain a Phase I ESAPhase I ESAEnvironmental Site Assessment conducted per the current ASTM E-1527 standard and the resulting report. .
Before conversion
  • Obtain a new Phase I ESAPhase I ESAEnvironmental Site Assessment conducted per the current ASTM E-1527 standard and the resulting report. . 
  • Obtain a Phase II ESAPhase II ESAEnvironmental Site Assessment conducted per the current ASTM E-1903 standard, or any other post-Phase I ESA, and the resulting report. if recommended by the new Phase I ESAPhase I ESAEnvironmental Site Assessment conducted per the current ASTM E-1527 standard and the resulting report. .
  • Ensure any required remediation is complete before you DeliverDeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. the permanent Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. .
Architectural Review Before Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property.

From an independent consulting architect, obtain an architectural review assessing the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code).

 

  • preliminary plans and specifications,
  • compliance with local building codes,
  • site characteristics, 
  • choice of building materials and finishes, 
  • asset quality, 
  • marketability, and 
  • overall design appropriateness for the intended use.
During construction Use a consulting architect for in-field inspections.
Final inspection

Require the consulting architect to conduct a final inspection confirming the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). :

 

  • was built according to the approved plans and specifications; and
  • meets all applicable building codes and zoning requirements. 
Appraisal Before CommitmentCommitmentContractual agreement between you and Fannie Mae where Fannie Mae agrees to buy a Mortgage Loan at a future date in exchange for an MBS, or at a specific price for a Cash Mortgage Loan, and you agree to Deliver that Mortgage Loan. Obtain an AppraisalAppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. per Part II, Chapter 2: Valuation and Income.
Before conversion

Obtain a new or updated AppraisalAppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. if

 

  • you request an increase in the permanent Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. amount above the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. terms, or
  • Fannie Mae requires it.

Guidance

You may use the same consulting architect as the construction lender if the consulting architect:

  • is independent and not an employee of the construction lender;
  • is retained directly by you and engaged separately by the construction lender; and
  • acknowledges they may be required to make recommendations that do not align with those of the construction lender.