Section 401

Site Inspection and Lease Audit

Requirements

Before the Commitment DateCommitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. , you must ensure:

  • a physical 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). was performed by
    • you, or
    • a Non-Employee or Outside Party per the Program Rules;
  • the MBAMBAMortgage Bankers Association Standard Inspection Form was completed; and
  • a lease audit was conducted reconciling the inspection findings with the
    • rent roll, and
    • lease terms.

You must:

  • randomly select PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). units for inspection; and
  • 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. any 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 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 has an overall rating of 4 or 5 per the Comprehensive Assessment tab of the MBAMBAMortgage Bankers Association Standard Inspection Form.

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). rent roll indicates an inspected unit is occupied:

  • the inspector must confirm the unit is occupied; and
  • you must:
    • confirm the inspector’s findings during your lease audit; and
    • complete a lease audit form or document your reconciliation of lease terms with the rent roll.

Guidance

When auditing the leases:

  • include a:
    • minimum of 5 leases; and
    • maximum of the lesser of
      • 30 leases, or
      • 10% of the leases;
  • at least 50% of the audited leases should include a combination of 
    • inspected units,
    • recent renewals, and
    • newly signed leases sufficient to verify rent trends;
  • if you detect material discrepancies during the initial review, increase the number of lease reviews;
  • include a tenant file review; and
  • review the cash ledger or receipts journal to validate rent collections.