Effective July 27, 2021, the COVID-19 related Temporary Property Inspection Protocols applying to physical Property assessments were updated, including:
The COVID-19 pandemic and related limitations presented the housing industry with new challenges, and Fannie Mae remains committed to ensuring safe and healthy housing for the communities we serve. While Property access has significantly improved, travel and traditional inspection methods may still be challenging in certain locations.
To provide maximum Property access flexibility, Fannie Mae:
- continues to allow Temporary Property Inspection Protocols; but
- makes no representation, warranty, or guaranty regarding their effectiveness.
Use of these Temporary Property Inspection Protocols:
- is at your discretion, unless Fannie Mae consent is required;
- does not prevent Fannie Mae from rejecting any inspection or report results; and
- may be suspended at any time in Fannie Mae's sole discretion.
When conducting an inspection, you and your third-party vendors:
- must make best efforts to inspect, at a minimum, common areas and vacant units (down, vacant, model); and
- remain solely responsible for complying with:
- the Guide;
- all professional standards; and
- all federal, state, and local laws, regulations, and ordinances, including
- health and safety requirements,
- privacy laws, and
- laws governing safely and securely transmitting or storing any images or information.
You remain responsible for ensuring that all reports comply with the Guide as modified by this Supplement, including:
- Property inspections;
- Property Condition Assessments (PCAs);
- Environmental Assessments;
- Appraisals; and
- any other report.
I. Underwriting - COVID-19 Temporary Property Inspection Protocols
Temporary Property Inspection Protocols for COVID-19 Limitations
You, or a Non-Employee or Outside Party per the Program Rules, must:
For Small Mortgage Loans, you may allow a non-employee to perform your site inspection if you document the use of a non-employee in your Transaction Approval Memo.
Compared to on-site inspections, virtual visits may require more documentation and time.
Limited On-Site Interior Access
Reports that may be completed with limited on-site interior access to occupied units include:
You must contact [email protected] if you cannot conduct a Green Rewards Verification inspection using an alternative inspection approach.
If you are unable to complete a standard Property assessment due to COVID-19 Limitations, you may consider alternative inspection approaches for visual inspections of occupied units.
For any COVID-19 Limitations, the appraiser should consider:
For any alternative inspection approach, you must
If the appraiser uses an alternative inspection approach:
|PCA and Phase 1 ESA
Every PCA and Phase I ESA prepared for Fannie Mae must comply with the applicable ASTM standard:
|For many other reports, limited access should not impact Guide compliance. For example, a Zoning Analysis or Zoning Risk Assessment may be performed remotely, therefore alternative inspection approaches are unnecessary.|
|Alternative Approaches for Site Inspections
Given certain limitations to internal access to occupied units, you may consider the following alternative inspection approaches:
|Reporting Data Gaps
Data gaps may result from limited Property access. For example, an inspector may be unable to
Data gaps may require documentation to
In addition to other ASTM standard-specific requirements, a PCA/ESA vendor must:
You must submit the transaction for Pre-Review if:
For Pre-Review Mortgage Loans, you must:
In some cases, additional reserves, or other mitigants and documentation may be required.
II. Servicing and Asset Management
A. COVID-19 Inspection Date Extensions
For all asset management Property inspections due in 2021:
- The Mortgage Loan's Property Inspection due date in the MAMP
- is correct, and
- reflects any Fannie Mae-granted extensions based on the current
- Property Condition Rating, and
- Fannie Mae Watchlist criteria.
- Fannie Mae reserves the right to adjust the Property Inspection due dates as new information is received (e.g., Property operating statements and changing conditions related to COVID-19), so you must frequently monitor the Property Inspection due dates in the MAMP.
- You must contact Multifamily Inspections for any required Property inspection that cannot be performed within 6 months of the Maturity Date.
B. COVID-19 Temporary Property Inspection Protocols
Fannie Mae is also temporarily modifying Part V, Chapter 5: Surveillance, Section 502: Property Inspections, to delegate you the authority to identify the appropriate individual to conduct the inspection (e.g., experience and training level, in-house versus third-party, etc.) provided that:
- you do not violate any federal, state, or local prohibitions; and
- all deviations from Part V, Chapter 5: Surveillance, Section 502: Property Inspections, and any reduced scope (e.g., inspecting only unoccupied units or exteriors) must be identified in the Limitations of Field Assessment section of the Fannie Mae Assessment Addendum of the MBA Standard Inspection Form.
The Property Inspection Protocols within the MAMP were revised to set the
- minimum number of units to "0", and
- third-party flag to "Yes".
Inspection or Assessment
Temporary Property Inspection Protocols for COVID-19 Limitations
|Post-Origination Property Inspections required by the Guide or Multifamily Asset Management Delegated Transaction: Transfer/Assumption (Form 4636.TA) for all Mortgage Loans||Periodic Property inspections must be performed by either a qualified third-party or in-house inspector per Part V, Chapter 5: Surveillance, Section 502.03: Property Inspection Protocols.||Confirm the Property Inspection due date for each Property per the MAMP.
For any required Property inspection, you:
|(continued)||Occupied Units||Not required if you reasonably determine it is unsafe to enter occupied units.
You may use alternative inspection approaches, including photos and videos by
|(continued)||Common Areas, Amenities, and Vacant Units||The above alternative inspection approaches may be used. If building interior access is impacted by COVID-19 Limitations, exterior inspection of major components may be acceptable; you must contact Multifamily Inspections.|
|(continued)||Building exterior and major mechanical systems||Always required, even if building interior access is impacted by COVID-19 Limitations.|
|(continued)||Roof||No change, but Inspector should use reasonable judgment in determining whether the roof is accessible without going through occupied areas.|
|Loss Inspections and Verification for Completion/Repairs, Required Replacements, and Casualty Restorations||
Validate completion of:
The above alternative inspection approaches may be used. In lieu of a full verification inspection, you must exercise sound credit judgment in determining:
|Green Rewards Verification Inspection||Validate Green Rewards Repairs agreed to in Form 4099.H and required by Schedule 6 to the Multifamily Loan Agreement or an Addendum to Schedule 6. In-unit inspection required to verify completion (e.g., faucets, toilets, LED lighting, HVAC, etc.)||
If COVID-19 Limitations impact the ability to conduct a compliant Property Appraisal, you must
|Property Condition Assessment (PCA)/Engineering for Loss Mitigation purposes||Fannie Mae may require or order a PCA.||If COVID-19 Limitations impact the ability to conduct a compliant Property inspection, you must contact Multifamily Loss Mitigation to discuss proposed alternative approaches.
The PCA Consultant must:
|Other Post-Origination PCA||
After the Mortgage Loan Origination Date, PCA required every
|Fannie Mae is granting you a 120-day extension.
You may instruct the PCA Consultant to conduct a PCA with a reduced scope of work (i.e., resulting in a PCA Report stating limitations on the scope of work required by Form 4099, such as only reviewing building exteriors, or not viewing occupied units), if:
For any other Property, the PCA Consultant must conduct a full PCA, but may use the above alternative inspection approaches if it will not limit the scope of work required in Form 4099.
For acceptable, well-documented reasons, Fannie Mae will consider further due date extensions.
You may not reduce the required Replacement Reserve deposit based on any post-Origination PCA conducted using any reduced scope or alternative inspection approach.
C. Monitoring Completion/Repairs
For all Mortgage Loans (other than Green Rewards Mortgage Loans) with open required Completion/Repairs work items, the completion due dates were extended to the dates shown in the MAMP.
- Fannie Mae
- will continue to monitor changing COVID-19 related conditions, and
- may further adjust the due dates in the MAMP.
- Any inspection confirming completion of required work may use the above alternative inspection approaches.
- You are delegated the authority to extend the due date specified in the Loan Agreement or the Completion/Repair Agreement for any non-life safety Completion/Repair (including Mortgage Loans rated Substandard or Doubtful) by:
- 1 year for a Mortgage Loan with no loss sharing;
- 2 years for a Mortgage Loan with loss sharing; or
- 3 years for a Mortgage Loan with loss sharing and Completion/Repair work that is impacted by COVID-19 Limitations.
- are not required to grant the extension, and
- should enforce the original due dates for Completion/Repairs in the Loan Documents if you determine necessary.
- You must notify Fannie Mae of any event of default related to Completion/Repairs by submitting a Non-Monetary Default Borrower Request in the MAMP.
For Green Rewards Mortgage Loans, there is no change to the required Green Repairs monitoring and reporting process (see the Green Rewards Mortgage Loans job aid on the DUS Property Monitor website). You must still submit delegated and non-delegated requests in the DUS Property Monitor module.
This Supplement supersedes Supplement 20-14: COVID-19 Temporary Inspection Protocols.
- the Fannie Mae Deal Team for underwriting questions; or
- Mark Driscoll at (617) 345-8052, or [email protected], for servicing and asset management questions.