Chapter 4
| Section 401 | |
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| 401.01 | |
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Requirements
A Green Mortgage LoanGreen Mortgage LoanMortgage Loan secured by a Property that incorporates features expected to have a positive environmental outcome including, but not limited to, reducing energy and water consumption at a Property, generating energy, or meeting criteria set by a third-party green building certification organization… is secured by a PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). that incorporates features expected to have a positive environmental outcome including, but not limited to, reducing energy and water consumption at a property, generating energy, or meeting criteria set by a third-party green building certification organization.
A Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. is secured by a PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). on which the BorrowerBorrowerPerson who is the obligor under the Note. agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III, Chapter 4: Green Mortgage Loans, Section 403: Green Rewards Mortgage Loans.
Requirements
For Green Rewards Mortgage LoansGreen Rewards Mortgage LoansMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. you must:
- retain a consultant to provide either:
- a High Performance Building (HPB) module (HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs.), including Appendix H: HPB Module Report Tables (Form 4099.H), as part of a required PCAPCAAssessment of the current physical condition and historical operation of the Property.; or
- a standalone HPBHPBHigh Performance Building report (HPB Report), including Form 4099.H; and
- complete the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report and Form 4099.H per the requirements of Form 4099.
Guidance
Fannie Mae will reimburse you for the cost of the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report when you deliver a Green Mortgage LoanGreen Mortgage LoanMortgage Loan secured by a Property that incorporates features expected to have a positive environmental outcome including, but not limited to, reducing energy and water consumption at a Property, generating energy, or meeting criteria set by a third-party green building certification organization….
Notwithstanding the general prohibition in Part IV A, Chapter 2: Pricing, Origination Fees, and Prepayment Premium Incentives, Section 202.01: Origination Fee regarding a LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. paying third-party costs, you may use the Origination FeeOrigination FeeFee charged by the Lender to the Borrower for underwriting and originating the Mortgage Loan, per Part IV A: Mortgage Loan Commitment, Delivery and Purchase Procedures, Section 202. to reimburse the BorrowerBorrowerPerson who is the obligor under the Note. for
- the cost of a standalone HPB Report, or
- the incremental cost of the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. over the cost of the base PCAPCAAssessment of the current physical condition and historical operation of the Property..
To submit the invoice for the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report for reimbursement, use the Green Mortgage Loan Job Aid.
| 401.03 | |
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Requirements
You must disclose as a Green MBS any Green Mortgage LoanGreen Mortgage LoanMortgage Loan secured by a Property that incorporates features expected to have a positive environmental outcome including, but not limited to, reducing energy and water consumption at a Property, generating energy, or meeting criteria set by a third-party green building certification organization… that you deliver as an MBS Mortgage LoanMBS Mortgage LoanMortgage Loan purchased by Fannie Mae in exchange for an issued MBS backed by the Mortgage Loan..
| 401.04 | |
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To commit and deliver a Green Mortgage LoanGreen Mortgage LoanMortgage Loan secured by a Property that incorporates features expected to have a positive environmental outcome including, but not limited to, reducing energy and water consumption at a Property, generating energy, or meeting criteria set by a third-party green building certification organization…, you must follow the Green Mortgage Loan Job Aid.
| Section 402 | |
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Requirements
To qualify as a Green Mortgage LoanGreen Mortgage LoanMortgage Loan secured by a Property that incorporates features expected to have a positive environmental outcome including, but not limited to, reducing energy and water consumption at a Property, generating energy, or meeting criteria set by a third-party green building certification organization…, you must:
- ensure that the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). has a Green Building CertificationGreen Building CertificationDesignation awarded by a third-party organization to multifamily properties constructed or maintained to meet specified energy and water efficiency standards or other sustainability criteria. that:
- is recognized by Fannie Mae and listed in the Green Building Certifications (Form 4250);
- applies specifically to the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). and not just to a development site that includes the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code).;
- covers all residential units of the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code).;
- was awarded no more than 5 years before Rate LockRate LockAgreement between the Lender and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation.; and
- is in effect at the time of Rate LockRate LockAgreement between the Lender and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation.; and
- review and approve a Green Building CertificationGreen Building CertificationDesignation awarded by a third-party organization to multifamily properties constructed or maintained to meet specified energy and water efficiency standards or other sustainability criteria. prior to
- Rate LockRate LockAgreement between the Lender and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation., if you are not using the Streamlined Rate Lock option, or
- the Mortgage Loan Origination DateMortgage Loan Origination DateDate the Lender funds a Mortgage Loan to the Borrower., if you are using the Streamlined Rate Lock option.
| Section 403 | |
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| 403.01 | |
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| 403.01A | |
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Requirements
For a Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). to be eligible, you must ensure that the BorrowerBorrowerPerson who is the obligor under the Note. selects Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. from the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report projected to result in an annual reduction for the whole PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). of at least 30% in combined energy and/or water consumption of which at least 15% must be attributable to savings in energy consumption.
Energy consumption savings may represent reductions in whole-PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). consumption of energy supplied by utilities or energy suppliers (including delivered energy such as fuel oil or propane) compared to the previous 12-month baseline through a combination of the installation of an onsite renewable energy system and energy efficiency measures.
For 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., a Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. must project a reduction in whole-PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). consumption of energy supplied by utilities or energy suppliers (including delivered energy such as fuel oil or propane) of at least 30% compared to the previous 12-month baseline through the installation of an onsite renewable energy system.
| 403.01B | |
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Requirements
You must score each HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report per the following 3-point system:
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Quality of HPB Module/HBP Report |
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1 |
Either you or Fannie Mae may approve the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPBHPBHigh Performance Building Report as is. |
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2 |
The consultant must address minor issues or clarify the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPBHPBHigh Performance Building Report before you or Fannie Mae approve it. |
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3 |
The consultant must make major changes or multiple revisions before you or Fannie Mae approve it. |
The final HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report must be scored as a "1" before you approve the report or submit it to Fannie Mae for approval, if required.
| 403.01C | |
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Requirements
You must submit an HPB Report or HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. to Fannie Mae for approval if:
- you have delivered less than 8 Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. that included an HPB Report (or a PCA ReportPCA ReportProperty Condition Assessment Report documenting the findings of a PCA. containing an HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs.); or
- your HPBHPBHigh Performance Building consultant has not been designated as “Pre-Qualified” by Fannie Mae at www.fanniemae.com/multifamily/green-initiative.
Operating Procedures
If Fannie Mae’s approval of an HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report is required, then you must:
- Submit the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report and the completed Form 4099.H through DUS GatewayDUS GatewayMultifamily pre-acquisition system including deal registration, Pre-Review and/or waiver tracking, decision records, or any successor systems. following the instructions in the Green Mortgage Loan Job Aid.
- Follow this submission timing:
- at least 10 days before the Mortgage Loan Origination DateMortgage Loan Origination DateDate the Lender funds a Mortgage Loan to the Borrower., if using the Streamlined Rate Lock option; or
- at least 5 days before Rate LockRate LockAgreement between the Lender and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation., if not using the Streamlined Rate Lock option.
| 403.01D | |
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Requirements
For 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. secured by Non-Contiguous ParcelsNon-Contiguous ParcelsMultiple parcels of land securing a Mortgage Loan that do not share common boundaries or that are separated by dedicated or private streets that are major arterials., a separate HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report is required for each Collateral Record in C&DC&DElectronic committing and delivery system used for issuing and confirming Commitments for acquiring Mortgage Loans, or any such successor system..
Requirements
After the BorrowerBorrowerPerson who is the obligor under the Note. selects the Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption., you must:
- Include the selected Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… or the Rehabilitation Reserve AgreementRehabilitation Reserve AgreementBorrower’s agreement to undertake identified Rehabilitation Work, the terms for funding the Rehabilitation Work, and the disbursement of funds from the Rehabilitation Reserve Account (e.g., Form 6222.Mod, Form 6222.Sub, or Form 4523)..
- Describe each Efficiency MeasureEfficiency MeasureEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. in enough detail to ensure that any specific products or equipment are installed, including quantities and applicable performance specifications.
- Ensure that funds to complete the selected Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. are deposited into the Completion/Repair EscrowCompletion/Repair EscrowCustodial Account established by the Lender and initially funded by an escrow deposit from the Borrower on the Mortgage Loan Origination Date to complete Completion/Repairs or other capital improvements at the Property. or the Rehabilitation Reserve AccountRehabilitation Reserve AccountCustodial Account established by the Lender and funded by deposits from the Borrower per the Rehabilitation Reserve Agreement to fund the Rehabilitation Work., in an amount equal to the greater of:
- 100% of the estimated cost of all capital improvements identified by the HPB ModuleHPB ModulePCA High Performance Building Module assessing cost effective opportunities to increase a Property’s energy and water efficiency and reduce costs. or HPB Report for the selected Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. (plus any amount that you decide to include for cost overruns); or
- any higher funding percentage you may required for capital improvements identified as Immediate Repairs by the PCAPCAAssessment of the current physical condition and historical operation of the Property..
- Ensure that all Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. are completed in a timely manner and no later than
- 12 months after the Mortgage Loan Origination DateMortgage Loan Origination DateDate the Lender funds a Mortgage Loan to the Borrower., or
- any shorter time period required by Part II, Chapter 4: Inspections and Reserves, Section 402: Property Condition Assessment (PCA) for capital improvements identified as Immediate Repairs by the PCAPCAAssessment of the current physical condition and historical operation of the Property..
| 403.03 | |
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Requirements
You must ensure that the Underwritten NCFUnderwritten NCFNet Cash Flow as adjusted by the Lender per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and features in Part III. for a Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. is calculated per Part II, Chapter 2: Valuation and Income or the applicable Part III Chapter.
Guidance
You may include projected energy and water cost savings from implementing selected Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. when calculating Underwritten NCFUnderwritten NCFNet Cash Flow as adjusted by the Lender per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and features in Part III., up to:
- 75% of any cost savings projected to accrue to the BorrowerBorrowerPerson who is the obligor under the Note.; plus
- 25% of any cost savings projected to accrue to the tenants, but only if the projections are based on whole-PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). or sampled (not modeled) consumption as defined by Form 4099.
| 403.04 | |
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Requirements
The maximum amount of a Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. that includes projected cost savings in the Underwritten NCFUnderwritten NCFNet Cash Flow as adjusted by the Lender per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and features in Part III. must not exceed 105% 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. amount based on the Underwritten NCFUnderwritten NCFNet Cash Flow as adjusted by the Lender per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and features in Part III. excluding the projected cost savings.
| 403.05 | |
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Requirements
You must base the maximum Green RewardsGreen RewardsMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. 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. amount on the aggregate UPBUPBUnpaid Principal Balance of all Pre-Existing Mortgage LoansPre-Existing Mortgage LoansMultifamily residential real estate loan secured by Liens against the Property having higher priority than the Lien securing the Subordinate Loan purchased by Fannie Mae. secured by the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code)., plus the amount of the Green RewardsGreen RewardsMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. 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..
Guidance
Certain Green RewardsGreen RewardsMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. Supplemental Mortgage LoansSupplemental Mortgage LoansMortgage 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. may not count toward the limit on the number of Supplemental Mortgage LoansSupplemental Mortgage LoansMortgage 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. (see Part III, Chapter 14: Supplemental Mortgage Loans, Section 1402: Supplemental Mortgage Loans).
| Section 404 | |
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Requirements
For any Green Mortgage LoanGreen Mortgage LoanMortgage Loan secured by a Property that incorporates features expected to have a positive environmental outcome including, but not limited to, reducing energy and water consumption at a Property, generating energy, or meeting criteria set by a third-party green building certification organization…, you must use the Modifications to Multifamily Loan and Security Agreement (Green Financing Mortgage Loans) (Form 6241), requiring the BorrowerBorrowerPerson who is the obligor under the Note. to report the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code).’s annual energy and water use.