Section 503
Guidance
Any seismic risk impacting 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). should be understood before the Commitment DateCommitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. . Seismic risk is assessed by analyzing the PGAPGAPeak Ground Acceleration as determined by the United States Geological Survey. at the location 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). .
After purchase 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. , no additional seismic risk evaluation is required.
Requirements
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). must have an acceptable level of seismic risk.
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. is ineligible for purchase 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). has
- a PGAPGAPeak Ground Acceleration as determined by the United States Geological Survey. equal to or greater than 0.15g, and
- 1 of these Structural Risk Factors:
- an unreinforced masonry building that has not been seismically retrofitted; or
- a building constructed on a slope with an angle exceeding 30 degrees (a 50% slope).
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 located in a High Seismic RiskHigh Seismic RiskArea or a specific site identified by the most recent USGS data (see United States Geological Survey (USGS) Peak Ground Acceleration (PGA) Calculator Tutorial) as having a PGA equal to or greater than 0.15g (i.e., 15% of the acceleration of gravity (g) using a 10% probability of exceedance in a 50… area, you must complete Form 4099.C. If a Structural Risk Factor is present, you must also obtain a Seismic Risk Assessment (SRA).
Requirements
You must obtain a Level 1 SRA dated within 12 months before the Commitment DateCommitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. for any 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 one of the Structural Risk Factors listed in Form 4099.C.
The SRA must:
- meet the ASTMASTMAmerican Society for Testing Materials seismic standards (ASTMASTMAmerican Society for Testing Materials E2026 – Standard Guide for Seismic Risk Assessment of Buildings and ASTMASTMAmerican Society for Testing Materials E2557 – Standard Practice for Probable Maximum Loss (PML) Evaluations for Earthquake Due Diligence Assessments);
- include estimates for the Scenario Expected Loss (SEL) and the Scenario Upper Loss (SUL);
- use a 10% probability of exceedance in a 50-year period;
- meet ASTMASTMAmerican Society for Testing Materials seismic standard professional qualifications;
- include structured data per Seismic Risk Assessment Data Supplement (Form 4093); and
- include a report narrative.
Guidance
For Small Mortgage LoansSmall Mortgage LoansMortgage Loan with an original loan amount less than or equal to $9 million. , the SRA field investigation may be performed by a PCAPCAAssessment of the Property's physical condition and historical operation. consultant or field observer if that professional has at least 2 years of experience performing seismic risk assessments of buildings.
A new SRA is not required for 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. ; you may rely on the original underwriting seismic analysis.
Guidance
The SEL percentage 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). and the building stability assessment will determine whether the seismic risk is acceptable.
Requirements
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). seismic risk is acceptable if all income-producing 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 any non-income producing 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). that support amenities
- comply with this Section 503.03,
- have an SEL of 20% or less, and
- meet the current building stability requirements of ASTMASTMAmerican Society for Testing Materials E2026.
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. is ineligible for purchase if it is 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 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). with an SEL greater than 40%.
Guidance
Your analysis should include:
- a Level 1 SRA, including Appendix X4 (ASTMASTMAmerican Society for Testing Materials E2557);
- your analysis of the seismic issues and recommendation, describing in detail
- the severity and pervasiveness of the conditions driving the SEL and stability issues,
- the risks presented to building stability, building damageability, site stability, and life safety, and
- the recommended retrofit or remediation requirements;
- a retrofit letter or the Borrower’sBorrower’sPerson who is the obligor per the Note. retrofit plan, timetable, and cost estimate;
- Form 4099.C; and
- a minimum of 6 PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
photos, including
- photos of those areas significant to the seismic calculation or stability issue, and
- elevation views of 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). having an SEL over 20% or a stability issue.
| 503.04 | |
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Requirements
If 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). is required to be retrofitted under any law, regulation, or ordinance,
- the SRA must describe a proposed retrofit plan, including associated costs, and
- the retrofit must be completed before the Commitment DateCommitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. .
| 503.05 | |
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Guidance
For any PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). where 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). have an SEL greater than 20% or a building stability issue, you should consider the following to mitigate seismic risk:
- perform a seismic retrofit sufficient to resolve all stability issues and reduce the SEL of all 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 20% or below; and
- obtain earthquake insurance coverage per Part II, Chapter 5: Property and Liability Insurance, Section 501.03D: Earthquake Insurance.
Earthquake insurance does not mitigate building collapse risk.