Section 503

Seismic Risk

503.01

Seismic Hazard and Risk Factors

 

Requirements

You must:

  • assess the seismic risk before Rate LockRate LockAgreement between you 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. by analyzing the PGAPGAPeak Ground Acceleration as determined by the United States Geological Survey. at 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). location;
  • determine 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 an acceptable level of seismic risk;
  • complete Form 4099.C 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;
  • obtain a Seismic Risk Assessment (SRA) if a Structural Risk Factor is identified per Form 4099.C; 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. 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. 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).

Guidance

After you 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. , no additional seismic risk evaluation is needed.

503.02

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; and
  • ensure the SRA:
    • meets 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);
    • includes estimates for the Scenario Expected Loss (SEL) and the Scenario Upper Loss (SUL);
    • uses a 10% probability of exceedance in a 50-year period;
    • meets ASTMASTMAmerican Society for Testing Materials seismic standard professional qualifications; and
    • complies with Form 4099.C, including
      • structured data per Seismic Risk Assessment Data Supplement (Form 4093), and
      • a report narrative.

Guidance

For a Small Mortgage LoanSmall Mortgage LoanMortgage 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; and
  • 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.
503.03

Acceptable Levels of Seismic Risk

Guidance

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). SEL percentage and the building stability assessment determines if the seismic risk is acceptable.

Requirements

You must:

  • determine 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). seismic risk is acceptable by confirming 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:
  • 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. 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 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). having 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 the:
    • severity and pervasiveness of the conditions driving the SEL and stability issues;
    • risks presented to
      • building stability,
      • building damageability,
      • site stability, and
      • life safety; and
    • recommended retrofit or remediation requirements;
  • a retrofit letter or the Borrower’sBorrower’sPerson who is the obligor per the Note. retrofit plan, including the
    • 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 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

Seismic Retrofit Ordinances

Requirements

You must ensure the SRA describes a proposed retrofit plan, including associated costs, 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). must be retrofitted under any

  • law,
  • regulation, or
  • ordinance.
503.05

Seismic Risk Mitigants

Requirements

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 must contact Multifamily InsuranceMultifamily InsuranceTeam that can be contacted at [email protected]. to determine acceptable mitigants for 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. DeliveryDeliverySubmission 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. , including:

Earthquake insurance does not mitigate seismic risk.