Chapter 3
| Section 301 | |
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| 301.01 | |
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Requirements
For each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , you must:
- identify the current zoning or land use designation;
- determine if the existing PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). use (e.g., multifamily, single-family, mixed use, Manufactured Housing CommunityManufactured Housing CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. , etc.) is expressly permitted per current zoning and land use laws and regulations; and
- confirm 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).
characteristics (e.g., building height, density, set-back lines, etc.):
- conform to current zoning requirements and land use designations; or
- are legally non-conforming per applicable zoning or land use laws and regulations.
If you order a Zoning Report from a zoning consultant, you must:
- upload the zoning report to DUS Docway in Folder II; and
- deliver structured data per the Zoning Report Data Supplement (Form 4089).
| 301.02 | |
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Requirements
If 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). is a legal non-conforming use, you must:
- ensure the BorrowerBorrowerPerson who is the obligor per the Note. executes Modifications to Multifamily Loan and Security Agreement (Legal Non-Conforming Status) (Form 6275);
- confirm, following a casualty, the percentage of damage to 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).
ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC).
(i.e., the destruction threshold) at which 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).
jurisdiction would prohibit the rebuilding of all impacted ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC).
to the pre-casualty use and condition under current
- laws,
- zoning requirements, and
- building codes; and
- if the destruction threshold is less than 50%, not 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 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. .
Requirements
If 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). characteristics are legally non-conforming, you must:
- ensure the BorrowerBorrowerPerson who is the obligor per the Note. executes the Modifications to Multifamily Loan and Security Agreement (Legal Non-Conforming Status) (Form 6275);
- confirm whether, if fully or partially destroyed, 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).
ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC).
can be fully rebuilt to the pre-casualty condition per current
- laws,
- zoning requirements, and
- building codes; and
- if 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).
ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC).
cannot be fully rebuilt to the pre-casualty condition,
- evaluate if the as-rebuilt PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). will support the 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. at the current TierTierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). , and
- document your analysis in the Transaction Approval Memo.
Guidance
To assess the Borrower'sBorrower'sPerson who is the obligor per the Note. ability to rebuild ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). on a non-conforming PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). to a level that will support the 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. at the current TierTierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). , you should consider:
- conducting a threshold analysis to determine the resulting actual amortizing DSCRDSCROn an annual basis or any specified period, the ratio of Net Cash Flow to the total of: principal, interest, and required Mezzanine Financing or Hard Preferred Equity payments. if the reconstructed ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). cannot be rebuilt as-is per current law;
- the likelihood of a casualty event (e.g., wind, earthquake, fire, flood, mine subsidence, etc.);
- the percentage of damage to the ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). at which 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). jurisdiction will require 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). be rebuilt to current zoning and land use requirements (i.e., the destruction threshold);
- which PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
characteristics the destruction threshold percentage applies to, such as
- market value,
- assessed value,
- replacement cost, or
- unit count;
- for PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
with multiple buildings, if the destruction threshold percentage applies to
- each building, or
- all buildings as a whole;
- the replacement cost to rebuild per current requirements for
- zoning, and
- land use;
- 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).
continued
- marketability, and
- economic viability;
- the amount and type of BorrowerBorrowerPerson who is the obligor per the Note. -maintained insurance coverage required per Part II, Chapter 5: Property and Liability Insurance, Section 501.02C: Ordinance or Law Insurance;
- insurance loss proceeds payout, compared to increased rebuilding costs, including from
- building code changes,
- Americans with Disabilities Act compliance, and
- the municipality's local zoning requirements (e.g., green compliance for new buildings, etc.);
- the sufficiency of estimated insurance proceeds from ordinance or law insurance and other coverages to repay the 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.
in the event of partial or full
- casualty, or
- condemnation; and
- for a TierTierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). 3 or TierTierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). 4 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. , if requiring execution of the Limited Payment Guaranty (Form 6020.LPG) would mitigate the risk of the as-rebuilt PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). not supporting a TierTierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). 2 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. .
| Section 302 | |
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Requirements
You must evaluate the impact of all easements (public and private), including their effect on:
- 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). value and marketability; and
- life safety issues, environmental risks, and acceptability in the market area for certain types of easements, such as for
- transcontinental pipelines,
- high power electric transmission lines, or
- drainage channels.
Guidance
Easements for normal utilities are generally acceptable, including those that provide natural gas, water, sewer, electricity, or telephone service to 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). .
Easements that serve other properties will generally be acceptable if they
- do not interfere with ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). on 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). ,
- are limited to residential and reasonable commercial use, and
- are covered by appropriate insurance.
| Section 303 | |
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| 303.01 | |
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Requirements
You must ensure that 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). is free of all LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. and rights of others, except for
- Permitted EncumbrancesPermitted EncumbrancesThe following permitted title exceptions: lien of current real property taxes, water charges, sewer rents and assessments not yet due and payable; covenants, conditions and restrictions, rights of way, easements and other matters of public record acceptable to the Lender and specifically…, and
- cable and laundry leases per Part II, Chapter 1: Attributes and Characteristics, Section 109: Commercial Leases.
You must analyze any restrictions on ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). or the use of 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). , in order to
- determine whether the restrictions are acceptable, and
- make recommendations for addressing the restrictions.
Examples of restrictions that must be analyzed include restrictive covenants and any restrictions that have been offered, or accepted, in order to obtain a zoning approval or building permit.
If a non-MAH PropertyMAH PropertyProperty encumbered by a regulatory agreement, land use restriction agreement, extended use agreement, or similar restriction that limits rents that can be charged to tenants, or imposes income limits on tenants. has an Affordable Regulatory AgreementAffordable Regulatory AgreementRegulatory, land use, extended use, or similar agreement or recorded restriction limiting rents, imposing maximum income restrictions on tenants, or placing other affordability restrictions on the use or occupancy of the Property (whether imposed by a government entity or self-imposed by a Borrower…, it must be subordinated to the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. per Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 705: Restrictive Covenants and Affordable Regulatory Agreements.
Guidance
When determining whether a restriction is acceptable, you should consider whether a restriction could negatively impact 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).
- value,
- use,
- security,
- marketability, or
- ability to generate NCFNCFOn an annual basis or any specified period, the total Net Operating Income, minus the full amount underwritten for Replacement Reserve expense, regardless of whether deposits will be made (per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and… sufficient to pay debt service.
Requirements
You must analyze the impact of any restriction on the conversion of a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). to a condominium or similar development.
Guidance
A restrictive covenant on condominium conversions will generally not have a negative impact if all of the following apply:
- The conversion restriction is for a period of 10 years or less.
- Any repurchase option or right of reversion in favor of a benefitted party:
- is unconditionally subordinated to the LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. and to the 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. ;
- includes an unconditional “standstill” provision prohibiting the exercise of such option or right while the 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. is outstanding; and
- automatically ends if a Foreclosure EventForeclosure EventAny of the following: Foreclosure per the Security Instrument; Fannie Mae's exercise of rights and remedies per the Security Instrument or applicable law (including Insolvency Laws) as holder of the Mortgage Loan and/or the Security Instrument, where Fannie Mae (or its designee or nominee),… occurs.
- The covenant provides that no mortgagee, trustee, or beneficiary under any mortgage or deed of trust will be liable for any act, omission, or indemnification obligation of the BorrowerBorrowerPerson who is the obligor per the Note. or any prior or subsequent owner of 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). .
- The covenant does not require any mortgagee, trustee, or beneficiary under a mortgage or deed of trust to execute an assumption or similar agreement if a Foreclosure EventForeclosure EventAny of the following: Foreclosure per the Security Instrument; Fannie Mae's exercise of rights and remedies per the Security Instrument or applicable law (including Insolvency Laws) as holder of the Mortgage Loan and/or the Security Instrument, where Fannie Mae (or its designee or nominee),… occurs.
Requirements
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If the Property... |
You must... |
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Previously secured taxable or tax-exempt bonds |
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Currently secures taxable or tax-exempt bonds that are being retired with proceeds of the Mortgage Loan |
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Guidance
A PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). that secures, or has secured, bonds may be subject to certain requirements, restrictions, or other features that survive repayment of the bonds such as:
- rent, income, transfer, or other restrictions;
- master lease requirements that support such restrictions; and
- indemnification or other requirements that could
- burden a future owner,
- depress the value or marketability of 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). , or
- prevent or inhibit foreclosure of a lien securing new financing.
For any bonds being retired with the proceeds of a 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. , you must prepare a written summary of the bond documents that:
- explains why any surviving features of the financing will not have a materially adverse effect on the 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. , 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). , you, or Fannie Mae;
- gives an overview of the redemption process for retiring the bonds; and
- is uploaded into DUS GatewayDUS GatewayMultifamily pre-acquisition system, or any successor systems, recording deal registration, Pre-Review and/or waiver tracking, Mortgage Loan Commitments, and decision records. prior to 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. .
| Section 304 | |
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Requirements
You must ensure that every 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. is covered by an ALTAALTAAmerican Land Title Association title policy or comparable title policy approved for use in the applicable jurisdiction.
The title policy must:
- be issued by a title company that is authorized to issue title policies where 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). is located;
- be in the original amount of the 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. , including all advances held in escrow or reserves;
- be no less than the amount of the 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. allocated to each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , if the 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. is secured by multiple properties;
- insure for the benefit of Fannie Mae;
- insure the first priority LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the 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. , subject only to the Permitted EncumbrancesPermitted EncumbrancesThe following permitted title exceptions: lien of current real property taxes, water charges, sewer rents and assessments not yet due and payable; covenants, conditions and restrictions, rights of way, easements and other matters of public record acceptable to the Lender and specifically…, unless it is a Supplemental Mortgage LoanSupplemental Mortgage LoanMortgage Loan purchased by Fannie Mae that is subordinated to, and has a Mortgage Loan Origination Date after, the Senior Mortgage Loan that is also owned by Fannie Mae. ;
- be in full force and effect with
- all premiums paid,
- no claims made by you or another lender, and
- no claims paid;
- insure the legal description of the insured property is identical to the legal description of the property shown on any required survey;
- contain:
- a Comprehensive Endorsement (ALTAALTAAmerican Land Title Association Form 9 or equivalent);
- an Environmental Protection Lien Endorsement (ALTAALTAAmerican Land Title Association Form 8 or equivalent) that only takes exception for a statute that could give an environmental protection LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. priority over the 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. ;
- a Mortgage Tax Endorsement (ALTAALTAAmerican Land Title Association Form 38.06 or equivalent) if the 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. is secured by an amended and restated Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. , such as a New York Consolidation, Extension, and Modification Agreement (Form 6025.NY.CEMA), or a Florida Consolidated, Amended, and Restated Mortgage (Form 6025.FL.AR); and
- appropriate Endorsements such as:
- Zoning (where available);
- CondominiumCondominiumStatutorily established Property ownership regime where Condominium Documents designate: individual units for separate ownership; and common areas for shared use and joint ownership by the unit owners. ;
- PUD;
- Variable Rate;
- Leasehold Mortgage;
- Location;
- Unlocated Easements; and/or
- Contiguity-Multiple Parcel;
- delete the standard survey exception;
- include a note on Schedule B, Part II listing you as the secured party and Fannie Mae as the assignee, for any financing statement filed in the recording office;
- not list any financing statement as an exception on Schedule B, Part I; and
- insure that any taxes, assessments, or other lienable items are not yet due and payable.
| 304.01 | |
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Guidance
The title company should have a satisfactory rating and adequate reserves.
| 304.02 | |
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Guidance
If the policy form meets all requirements of this Section, Fannie Mae will accept the standard 2021 or 2006 ALTAALTAAmerican Land Title Association forms of title insurance policies.
In those states where ALTAALTAAmerican Land Title Association forms of coverage are not approved by the state insurance board or commission, you should get the closest equivalent alternative coverage.
| 304.03 | |
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Guidance
You may use electronically issued title policies if the coverage is enforceable against the insurer.
| 304.04 | |
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Guidance
The title policy should
- name you as the insured, and
- insure Fannie Mae when the 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. is delivered (either by reference to your “successors and assigns, as their interests may appear” or by direct reference to Fannie Mae).
| 304.05 | |
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Requirements
You must have title coverage in effect (i.e., the date of the signed pro forma policy or marked-up commitment) when you fund the 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. .
Guidance
The issued title policy should be later-dated to cover the Assignment of Security Instrument’s recording date.
| 304.06 | |
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Guidance
If the title policy includes exceptions to matters shown on a recorded map or plat, the exceptions should be specifically described.
Guidance
If any taxes could become delinquent within 60 days after closing, you should require payment at closing.
| 304.08 | |
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Guidance
Any financing statement not filed in the recording office (such as a Uniform Commercial Code filing) may be shown as an informational note on Schedule B, Part II.
| 304.09 | |
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| 304.09A | |
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Guidance
You should get an appropriate ALTAALTAAmerican Land Title Association form of endorsement that is incorporated into the “base” title policy. In jurisdictions where an ALTAALTAAmerican Land Title Association form is not available, you may include in Schedule B an equivalent form of endorsement or affirmative coverage.
| 304.09C | |
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Guidance
You should consider whether an adverse circumstance affecting 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). would be an acceptable exception on Schedule B, Part I. Examples include:
- encroachments onto 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). ;
- easements or rights of way over 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). ;
- encroachments by the ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). onto adjoining land; and
- violations of existing covenants, conditions, and restrictions.
| 304.10 | |
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Guidance
You should keep copies of any restrictions shown as exceptions in the title policy (such as easements and encumbrances) in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. .
| Section 305 | |
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| 305.01 | |
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Requirements
You must decide whether to get an as-built survey and comply with:
- Part II, Chapter 3: Legal Compliance, Section 305.02: Survey, if you require a survey; or
- Part II, Chapter 3: Legal Compliance, Section 305.03: Decision Not to Obtain a Survey, if you do not require a survey.
| 305.02 | |
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Requirements
If you require an as-built survey, it must:
- meet the requirements of an ALTAALTAAmerican Land Title Association /NSPSNSPSNational Society of Professional Surveyors Land Title Survey (made per the 2021 Minimum Standard Detail Requirements), including the required certification; and
- allow the title company to delete the standard survey exception from the title policy.
Guidance
An acceptable as-built survey:
- should include these items from Table A to all the ALTAALTAAmerican Land Title Association /NSPSNSPSNational Society of Professional Surveyors Minimum Standard Detail Requirements: 1, 2, 3, 4, 6(a) and (b), 7(a), 8, 9, 10, 13, 16, and 18;
- may omit the following from Table A:
- item 1 for a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). with a lot and block legal description; and/or
- item 10, if there are no party walls; and
- should be dated within 360 days before recording the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. .
Requirements
If an existing survey dated more than 360 days before the effective date of the title insurance policy is used, it must satisfy all Title Insurance Company requirements for the deletion of the standard survey exception.
Guidance
The Title Insurance Company may require a “no new improvements” affidavit from the BorrowerBorrowerPerson who is the obligor per the Note. certifying that no changes have been made to 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). since the date of the survey. An existing survey dated within 360 days before the effective date of the title insurance policy, but not prepared in connection with the origination of the 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. , may be recertified to you, the Title Insurance Company, and Fannie Mae for the 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. .
You should consider whether an adverse circumstance found by a survey would be acceptable. Examples include:
- encroachments over boundary lines, setback lines, or easements; and
- the absence of necessary appurtenant easements, such as a storm or sanitary sewer easement.
Requirements
If you do not require an as-built survey:
- either you or the AppraiserAppraiserPerson engaged to estimate a Property’s market value per USPAP. must conduct a visual inspection of 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). ;
- any visible site condition (such as an easement, right-of-way, or encroachment) must be disclosed and insured under the title policy; and
- the title company must delete the standard survey exception from the title policy.
| 305.04 | |
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Requirements
Whether or not you decide to get an as-built survey, Part II, Chapter 5: Property and Liability Insurance, Section 501.03: Catastrophic Risk Insurance requires you to determine if any ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). are located in an SFHASFHASpecial Flood Hazard Area designated by FEMA. Zone A or Zone V.
| Section 306 | |
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Requirements
You must:
- Ensure that the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. creates a LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on all Personal PropertyPersonal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. .
- Ensure that the LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. is a perfected first priority LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. .
- Assign each UCCUCCUniform Commercial Code security interest to Fannie Mae.
Guidance
Article 9 of the UCCUCCUniform Commercial Code covers the perfection of a security interest in Personal PropertyPersonal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. .
The following table describes how to create and perfect a security interest.
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To… |
Do the following… |
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Establish whether the Borrower or a third party owns the Personal Property |
Confirm that the BorrowerBorrowerPerson who is the obligor per the Note. has provided a representation of ownership in the Underwriting Certificate (Borrower) (Form 6460.Borrower). |
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Verify that no other party has a Lien on the Personal Property |
Conduct searches for UCCUCCUniform Commercial Code financing statements, tax LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. , and judgments on all relevant parties to the transaction. |
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Obtain a perfected first security interest in the Personal Property |
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Assign the security interest from you to Fannie Mae |
File an appropriate assignment (e.g., UCCUCCUniform Commercial Code -1Ad; UCCUCCUniform Commercial Code -3) in the same office(s) where the UCCUCCUniform Commercial Code -1 is filed or recorded. |