Section 301 | |
|
301.01 | |
|
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 | |
|
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 | |
|
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 | |
|
Section 304 | |
|
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 | |
|
Guidance
The title company should have a satisfactory rating and adequate reserves.
304.02 | |
|
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 | |
|
Guidance
You may use electronically issued title policies if the coverage is enforceable against the insurer.
304.04 | |
|
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 | |
|
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 | |
|
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 | |
|
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 | |
|
304.10 | |
|
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 | |
|
305.01 | |
|
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 | |
|
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 appraiser 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 | |
|
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 | |
|