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Part I
Mortgage Loan
  • Chapter 1
    Overview
    • Section 101
      Using the Guide
      • 101.01 Organization
      • 101.02 References
    • Section 102
      Delegation and Underwriting
    • Section 103
      Transaction Approval Memo
    • Section 104
      Representations
  • Chapter 2
    Mortgage Loan
    • Section 201
      Registration
    • Section 202
      Delegated Mortgage Loans
    • Section 203
      Pre-Review Mortgage Loans
    • Section 204
      Letters of Credit
      • 204.01 Generally
      • 204.02 Issuers and Ratings
      • 204.03 Verifying Issuer Ratings
      • 204.04 Restrictions on Issuer Collateral
      • 204.05 Drawing on Letter of Credit
  • Chapter 3
    Borrower, Guarantor, Key Principals, and Principals
    • Section 301
      Generally
    • Section 302
      Borrower Organizational Structure
      • 302.01 Single-Asset Entity
      • 302.02 Co-Tenant Borrowers
        • 302.02 A Tenancy-in-Common Agreement
        • 302.02 B Key Principal Execution of Guaranty
    • Section 303
      Key Principals, Principals, and Guarantors
      • 303.01 Entity Review
      • 303.02 Fund
    • Section 304
      Financial Statements
    • Section 305
      Multifamily Underwriting Certificate
    • Section 306
      Fraudulent Conveyance
    • Section 307
      Applicant Experience Check
    • Section 308
      Compliance
    • Section 309
      Execution of Non-Recourse Guaranty
    • Section 310
      Conflict Mortgage Loans
      • 310.01 Description
      • 310.02 Restrictions
        • 310.02 A Underwriting
        • 310.02 B Servicing
        • 310.02 C No First Right of Refusal
        • 310.02 D Additional Disclosure
        • 310.02 E Notifications
Part II
Property
  • Chapter 1
    Attributes and Characteristics
    • Section 101
      Generally
    • Section 102
      Property Ownership; Leasehold
    • Section 103
      Ground Leased Properties
      • 103.01 Generally
      • 103.02 Ground Lease Rents
      • 103.03 Ground Lease Estoppel Certificate
      • 103.04 Ground Lease Review
    • Section 104
      Minimum Occupancy
      • 104.01 Residential Occupancy
      • 104.02 Qualified Occupants
    • Section 105
      Certificates of Occupancy
    • Section 106
      Phased Properties
    • Section 107
      Commercial Leases
      • 107.01 Material Commercial Leases
        • 107.01 A Lease Review
        • 107.01 B Lease Approval
        • 107.01 C Lease Modifications
        • 107.01 D Tenant Estoppel Certificate
        • 107.01 E Subordination, Non-Disturbance and Attornment
      • 107.02 Non-Material Commercial Leases
        • 107.02 A Tenant Estoppel Certificate; Lease Modification
        • 107.02 B Non-Material Commercial Lease Types
      • 107.03 Short Term Rentals
    • Section 108
      Property Management and Agreement
      • 108.01 Property Management
      • 108.02 Property Management Agreement
  • Chapter 2
    Valuation and Income
    • Section 201
      Market and Valuation
      • 201.01 Market Analysis
      • 201.02 Appraisal
        • 201.02 A Appraiser Role and Qualifications
        • 201.02 B Valuation Date
        • 201.02 C Appraised Value
      • 201.03 Underwriting Value
    • Section 202
      Income Analysis
      • 202.01 Underwritten Net Cash Flow (Underwritten NCF)
      • 202.02 Underwritten DSCR
    • Section 203
      Refinance Risk Analysis
      • 203.01 Base Assumptions
      • 203.02 Alternative Assumptions
    • Section 204
      Cash Out Analysis
    • Section 205
      Rent-Stabilized Properties
  • Chapter 3
    Legal Compliance
    • Section 301
      Zoning and Legal Non-Conforming Uses
    • Section 302
      Easements
    • Section 303
      Liens and Encumbrances
      • 303.01 Generally
      • 303.02 Property Previously Secured Bond Financing
    • Section 304
      Title Insurance
      • 304.01 Title Insurance Company
      • 304.02 Policy Form
      • 304.03 Electronic Policies
      • 304.04 Insured
      • 304.05 Effective Date
      • 304.06 Survey Exception
      • 304.07 Exception for Taxes, Assessments, or Other Lienable Items
      • 304.08 Financing Statements
      • 304.09 Endorsements
        • 304.09 A Generally
        • 304.09 B Environmental Protection Lien Endorsement
        • 304.09 C Comprehensive Endorsement
      • 304.10 Document Retention
    • Section 305
      Survey
      • 305.01 Decision to Obtain a Survey
      • 305.02 Survey
      • 305.03 Decision Not to Obtain a Survey
      • 305.04 Location of Improvements
    • Section 306
      Security Interests in Personal Property
      • 306.01 Uniform Commercial Code (UCC) Financing Statements
      • 306.02 Creating and Perfecting the Security Interest
  • Chapter 4
    Inspections and Reserves
    • Section 401
      Site Inspection
    • Section 402
      Property Condition Assessment (PCA)
      • 402.01 When to Perform a PCA
      • 402.02 Date of PCA Report and PCA Site Visit
      • 402.03 Conducting the PCA
    • Section 403
      Completion/Repairs
      • 403.01 Property Evaluation
      • 403.02 Completion/Repairs Funding
      • 403.03 Life Safety Issues
      • 403.04 Verifying Completion/Repairs
    • Section 404
      Replacement Reserve
      • 404.01 Determining Replacement Reserve
      • 404.02 Replacement Reserve Funding
      • 404.03 Alternative Replacement Reserve Funding
    • Section 405
      Escrow Requirements for Taxes and Insurance
      • 405.01 Escrows
      • 405.02 Real Estate Tax Escrow Funding
      • 405.03 Insurance Escrow Funding
  • Chapter 5
    Property and Liability Insurance
    • Section 501
      Property and Liability Insurance
      • 501.01 General Insurance – Applies to All Policies
        • 501.01 A Generally
        • 501.01 B Blanket and Other Policies Covering Multiple Properties
        • 501.01 C Insurance Carrier Rating
        • 501.01 D Term
        • 501.01 E Payment of Premium
        • 501.01 F Evidence of Insurance
        • 501.01 G Insurance Compliance and Data
        • 501.01 H Post Closing Insurance Exceptions
      • 501.02 Property Insurance
        • 501.02 A Minimum Coverage Amounts
        • 501.02 B Business Income (including Rental Value) Insurance
        • 501.02 C Ordinance or Law Insurance
        • 501.02 D Boiler and Machinery / Equipment / Mechanical Breakdown Insurance
        • 501.02 E Builder’s Risk Insurance
        • 501.02 F Fidelity Bond / Crime Insurance
        • 501.02 G Regional Perils Insurance
      • 501.03 Catastrophic Risk Insurance
        • 501.03 A Generally
        • 501.03 B Windstorm Insurance
        • 501.03 C Flood Insurance
        • 501.03 D Earthquake Insurance
        • 501.03 E Terrorism Insurance
      • 501.04 Liability Insurance
        • 501.04 A Commercial General Liability Insurance
        • 501.04 B Professional Liability Insurance
        • 501.04 C Risk Retention Groups and Captive Insurance
        • 501.04 D Workers’ Compensation Insurance
        • 501.04 E Directors’ and Officers’ Liability Insurance
        • 501.04 F Commercial Auto Liability Insurance
      • 501.05 Small Loans
        • 501.05 A Permanent Evidence
        • 501.05 B Excess/Umbrella Insurance
        • 501.05 C Terrorism Insurance
    • Section 502
      Environmental Matters
      • 502.01 Environmental Site Assessments
      • 502.02 Lender’s Responsibilities
      • 502.03 Environmental Indemnity Agreement
    • Section 503
      Seismic Risk
      • 503.01 Seismic Hazard and Risk Factors
      • 503.02 Seismic Risk Assessment (SRA)
      • 503.03 Acceptable Levels of Seismic Risk
      • 503.04 Seismic Retrofit Ordinances
      • 503.05 Seismic Risk Mitigants
Part III
Products and Features
  • Chapter 1
    Student Housing Properties
    • Section 101
      Description
      • 101.01 Student Housing Property
      • 101.02 Dedicated Student Housing Property
    • Section 102
      Generally
    • Section 103
      Dedicated Student Housing Property
      • 103.01 Eligible Property Characteristics
      • 103.02 Ineligible Property Characteristics
      • 103.03 Residential Leases
      • 103.04 Properties on College/University Land
      • 103.05 Additional Underwriting Documentation
    • Section 104
      Underwritten NCF
    • Section 105
      Replacement Reserve
      • 105.01 Determining Replacement Reserve
      • 105.02 Replacement Reserve Funding
  • Chapter 2
    Military Housing Properties
    • Section 201
      Description
    • Section 202
      Ineligible Property Types
    • Section 203
      Generally
  • Chapter 3
    Moderate Rehabilitation Mortgage Loans
    • Section 301
      Description
    • Section 302
      Underwriting
    • Section 303
      Rehabilitation Work Costing More than $20,000 Per Unit
      • 303.01 Rehabilitation Work Evaluation Report
      • 303.02 Rehabilitation Reserve Agreement
    • Section 304
      Supplemental Mortgage Loans
  • Chapter 4
    Green Mortgage Loans
    • Section 401
      Generally
      • 401.01 Description
      • 401.02 High Performance Building Module
      • 401.03 Green MBS
      • 401.04 Committing and Delivery
    • Section 402
      Green Building Certification
    • Section 403
      Green Rewards Mortgage Loans
      • 403.01 Eligibility
        • 403.01 A Generally
        • 403.01 B HPB Module/HPB Report Scoring
        • 403.01 C HPB Module/HPB Report Approval
        • 403.01 D Non-Contiguous Parcels
      • 403.02 Implementing Energy- and Water-Efficiency Measures
      • 403.03 Underwritten NCF
      • 403.04 Maximum Amount
      • 403.05 Supplemental Mortgage Loans
    • Section 404
      Annual Energy Reporting
  • Chapter 5
    Seniors Housing Properties
    • Section 501
      Generally
      • 501.01 Description
      • 501.02 Eligible Lenders
      • 501.03 Key Principal/Sponsor Experience
    • Section 502
      Eligible Properties
      • 502.01 Eligible Properties
      • 502.02 Ineligible Properties
    • Section 503
      Continuing Care Retirement Communities (CCRCs)
    • Section 504
      Seniors Housing Property Income
      • 504.01 Underwritten NCF
      • 504.02 Skilled Nursing NCF Test
      • 504.03 Operating Lease Ratios
      • 504.04 Operating Lease Analysis
    • Section 505
      Replacement Reserve
    • Section 506
      Medicaid Funds
      • 506.01 Dependency and Medicaid Transition Reserve
      • 506.02 State Medicaid
    • Section 507
      Consultant Reports
      • 507.01 Management, Operations, and Regulatory Compliance
      • 507.02 Management and Operations Reports
      • 507.03 Regulatory Compliance Report
  • Chapter 6
    Manufactured Housing Communities
    • Section 601
      Description
    • Section 602
      Lender Eligibility
    • Section 603
      Legal and Property Compliance
      • 603.01 Borrower and the MH Community
        • 603.01 A Borrower Ownership
        • 603.01 B Collateral; Borrower-Owned Homes and Affiliate-Owned Homes
        • 603.01 C MH Community
      • 603.02 MH Community Score
      • 603.03 Code Standards
      • 603.04 Flood Zone
        • 603.04 A Rising Water
        • 603.04 B Moving Water
      • 603.05 Lease Terms
        • 603.05 A Master Leases
        • 603.05 B MH Site Leases
        • 603.05 C Security Instrument Modification
    • Section 604
      Property Insurance
    • Section 605
      Survey
      • 605.01 Public Roadways, Private Interior Roadways, and Drives
      • 605.02 Setbacks
      • 605.03 Encroachments
    • Section 606
      Property Income and Underwritten NCF
    • Section 607
      Replacement Reserve
  • Chapter 7
    Multifamily Affordable Housing Properties
    • Section 701
      Generally
      • 701.01 Description
      • 701.02 Eligible Lenders
    • Section 702
      MAH Property Eligibility
      • 702.01 Eligible Characteristics and Underwriting
      • 702.02 Ineligible Characteristics and Underwriting
    • Section 703
      Property Income and Underwriting
      • 703.01 Underwritten NCF
      • 703.02 Underwriting
        • 703.02 A Not-for-Profit (IRC §501[c][3]) Borrower may be a Multi-Asset Borrower
        • 703.02 B Appraised Value and Underwriting Value
        • 703.02 C Market Study
        • 703.02 D Restabilization Reserve
        • 703.02 E Affordable Regulatory Agreement Restrictions
    • Section 704
      Subordinate Financing
      • 704.01 Interest Rate and Payments
      • 704.02 Loan Term
      • 704.03 Collateral
      • 704.04 Credit Support
      • 704.05 Soft Financing
      • 704.06 Subordinate Lender
      • 704.07 Developer's Notes
      • 704.08 Subordination Agreement
      • 704.09 Lien Priority and Title Insurance Policy
      • 704.10 Form of Subordinate Loan Documents
      • 704.11 Prepayment
    • Section 705
      Restrictive Covenants and Affordable Regulatory Agreements
    • Section 706
      ROAR Loan
      • 706.01 Generally
      • 706.02 Timing
      • 706.03 General Underwriting
      • 706.04 Additional Underwriting and Loan Documents
    • Section 707
      HAP Contract Properties
      • 707.01 Properties with Both HAP Contracts and LIHTC Units
      • 707.02 HAP Contract Review Sheet
    • Section 708
      Refinancing Section 236 Properties – IRP is Maintained
      • 708.01 No Additional Proceeds
      • 708.02 Additional Proceeds from Mortgage Loan
      • 708.03 Additional Proceeds from Other Sources
    • Section 709
      LIHTC Properties – Lender Equity Interest
    • Section 710
      Transactions with Fannie Mae Debt and Equity Interests
      • 710.01 Transactions Funded with Tax-Exempt Bond Proceeds
      • 710.02 Fannie Mae Credit-Enhanced Tax-Exempt Bond Issuance
    • Section 711
      FHA Risk Sharing
      • 711.01 Description
      • 711.02 Eligibility
        • 711.02 A Borrowers, Key Principals, Guarantors, and Principals
        • 711.02 B Generally
        • 711.02 C Cash Out
      • 711.03 Mortgage Insurance Premium
      • 711.04 Reserving FHA Units
      • 711.05 Subsidy Layering Review
      • 711.06 Lender FHA Risk Sharing Reserve and Loss Sharing Modifications
  • Chapter 8
    Cooperative Properties
    • Section 801
      Description
    • Section 802
      Eligible Mortgage Loans
      • 802.01 Basic Conditions
      • 802.02 Financial Conditions
      • 802.03 Property Management Conditions
      • 802.04 Other Considerations
    • Section 803
      Underwriting
      • 803.01 Financial Operation
      • 803.02 Property Valuation
      • 803.03 Subordinate Debt
    • Section 804
      Income Analysis
      • 804.01 Cooperative Market Rental Basis NCF (Underwritten NCF)
      • 804.02 Cooperative Market Rental Basis DSCR (Underwritten DSCR)
      • 804.03 Actual Cooperative Property NCF
      • 804.04 Actual Cooperative Property DSCR
    • Section 805
      Limited Equity Cooperative Properties
  • Chapter 9
    Small Mortgage Loans
    • Section 901
      Generally
      • 901.01 Description
      • 901.02 Applicability
    • Section 902
      Key Principal Guaranty Obligation
    • Section 903
      Occupancy
    • Section 904
      Corporate Leases; Leases to One Entity
    • Section 905
      Property Income Analysis
      • 905.01 Small Mortgage Loan Underwritten NCF (Underwritten NCF)
      • 905.02 Underwritten DSCR
    • Section 906
      Property Management
    • Section 907
      Property Condition
      • 907.01 Site Inspection by Lender or Other Third Party
      • 907.02 Site Inspection by Borrower
      • 907.03 PCA
    • Section 908
      Replacement Reserve
    • Section 909
      Environmental Matters and Inspections
    • Section 910
      Borrower, Key Principals, Guarantors, and Principals
      • 910.01 Borrower Organizational Structure
      • 910.02 Co-Tenant Borrowers
      • 910.03 Key Principals
      • 910.04 Principals
      • 910.05 Financial Statements
      • 910.06 Net Worth and Liquid Assets
    • Section 911
      Credit Reports
      • 911.01 Credit Report
      • 911.02 FICO Scoring
      • 911.03 Reviewing the Credit Report
  • Chapter 10
    Healthy Housing Rewards
    • Section 1001
      Healthy Housing Rewards
    • Section 1002
      Healthy Design
    • Section 1003
      Enhanced Resident Services
  • Chapter 11
    Adjustable Rate Mortgage (ARM) Loans
    • Section 1101
      Description
    • Section 1102
      Underwriting
    • Section 1103
      Prepayment Terms
      • 1103.01 Generally
      • 1103.02 1% Prepayment Premium Schedule
  • Chapter 12
    Structured Adjustable Rate Mortgage (SARM) Loans
    • Section 1201
      Description
    • Section 1202
      Underwriting
    • Section 1203
      Actual Amortization Calculation
    • Section 1204
      Prepayment Terms
      • 1204.01 Generally
      • 1204.02 Prepayment Option 1 – Declining Prepayment Premium Schedule
      • 1204.03 Prepayment Option 2 - 1% Prepayment Premium Schedule
    • Section 1205
      Interest Rate Caps
      • 1205.01 Replacement Interest Rate Cap
      • 1205.02 Determining the Cap Strike Rate
      • 1205.03 Including the Cap Cost Factor in the Variable Underwriting Rate
      • 1205.04 Establishing Interest Rate Cap Reserves
      • 1205.05 Interest Rate Cap Contract Documentation and Delivery
  • Chapter 13
    Hybrid Adjustable Rate Mortgage (Hybrid ARM) Loans
    • Section 1301
      Description
    • Section 1302
      Interest Rate Conversion Date
    • Section 1303
      Prepayment Terms
    • Section 1304
      Monthly Principal and Interest Payments
      • 1304.01 During the Fixed Rate Term
      • 1304.02 On the Hybrid ARM Loan Conversion Date
      • 1304.03 During the Adjustable Rate Term
  • Chapter 14
    Supplemental Mortgage Loans
    • Section 1401
      Description
    • Section 1402
      Supplemental Mortgage Loans
      • 1402.01 Description
      • 1402.02 Coterminous and Non-Coterminous
      • 1402.03 Loan Amount
        • 1402.03 A Maximum Loan Amount
        • 1402.03 B Calculating the Debt Service
        • 1402.03 C Calculating the DSCR and LTV
        • 1402.03 D New Loan Test
      • 1402.04 Tier Dropping
        • 1402.04 A Designating
        • 1402.04 B Eligibility
        • 1402.04 C Ineligible Mortgage Loans
      • 1402.05 Streamlined Underwriting
        • 1402.05 A Property
        • 1402.05 B Borrower, Guarantor, Key Principals, and Principals
  • Chapter 15
    Split Mortgage Loans and Bifurcated Mortgage Loans
    • Section 1501
      Description
    • Section 1502
      Characteristics
  • Chapter 16
    Mezzanine Financing and Preferred Equity
    • Section 1601
      Mezzanine Financing
      • 1601.01 Description
        • 1601.01 A Eligible Mortgage Loans
        • 1601.01 B Eligible Terms
        • 1601.01 C Loss Sharing
        • 1601.01 D Lender's Loan Application
      • 1601.02 Underwriting
      • 1601.03 Submission
        • 1601.03 A Materials
        • 1601.03 B Data
      • 1601.04 Intercreditor Agreement
      • 1601.05 Servicing
    • Section 1602
      Preferred Equity
      • 1602.01 Description
        • 1602.01 A Definitions
        • 1602.01 B Exclusions
        • 1602.01 C Eligible Mortgage Loans
        • 1602.01 D Structures
        • 1602.01 E Limitations
        • 1602.01 F Lender's Loan Application
      • 1602.02 Underwriting
      • 1602.03 Hard Preferred Equity
        • 1602.03 A Submission
        • 1602.03 B Outside Counsel and Due Diligence Fees
  • Chapter 17
    Structured Transactions
    • Section 1701
      Description
    • Section 1702
      Credit Facilities
    • Section 1703
      Bulk Deliveries
  • Chapter 18
    Choice Refinance Loans
    • Section 1801
      Eligibility
    • Section 1802
      Lender Delegation
    • Section 1803
      Prepayment Premium and Origination Fees
    • Section 1804
      Streamlined Underwriting
      • 1804.01 Zoning
      • 1804.02 Property Condition Assessment (PCA)
      • 1804.03 Environmental Site Assessment
      • 1804.04 Survey
      • 1804.05 Borrower Structure and Experience
      • 1804.06 Borrower Credit
      • 1804.07 Property Management
      • 1804.08 Replacement Reserve
      • 1804.09 Real Estate Tax and Insurance Escrows
    • Section 1805
      Property Ownership Change
Part IV A
Mortgage Loan Commitment, Delivery and Purchase Procedures
  • Chapter 1
    General Mortgage Loan Purchase Requirements
    • Section 101
      Overview of Part IV
    • Section 102
      Lender Eligibility
    • Section 103
      Purchase Types
    • Section 104
      MBS Eligibility
  • Chapter 2
    Pricing, Origination Fees, and Prepayment Premium Incentives
    • Section 201
      Pricing Memos
    • Section 202
      Required Fees and Lender Compensation
      • 202.01 Origination Fee
      • 202.02 Servicing and Guaranty Fees
      • 202.03 Other Fees
    • Section 203
      Choice Refinance Loans – Origination Fees and Prepayment Premiums
      • 203.01 General
      • 203.02 Reduced Origination Fees
      • 203.03 Reduced Prepayment Premiums on Portfolio Mortgage Loans Refinanced with Fannie Mae
        • 203.03 A Refinancing Cash Portfolio Mortgage Loans as Choice Refinance Loans
        • 203.03 B Refinancing MBS Portfolio Mortgage Loans as Choice Refinance Loans
    • Section 204
      Refi Plus Refinance Mortgage Loans
    • Section 205
      Origination Fee and Prepayment Premium Waivers for Portfolio Mortgage Loans Not Being Serviced by the Refinance Lender
    • Section 206
      In Place Loan Fees
      • 206.01 Level 2 Fees
      • 206.02 Level 3 Fees
      • 206.03 Pricing Premiums
  • Chapter 3
    Committing
    • Section 301
      General
    • Section 302
      Requirements for Rate Lock and Commitment
      • 302.01 Pre-Commitment Terms
      • 302.02 Borrower Commitment
      • 302.03 Trading Agreements
      • 302.04 Required Practices for Committing and Delivering Mortgage Loans to Fannie Mae
    • Section 303
      Obtaining a Rate Lock
      • 303.01 General
      • 303.02 Rate Lock Periods
      • 303.03 Rate Lock Amount
      • 303.04 Locking the Rate
        • 303.04 A Lender-Arranged Sale to a Third Party MBS Investor
        • 303.04 B Lender Sale to Fannie Mae as MBS Investor
        • 303.04 C Lender Sale to Fannie Mae for Cash
      • 303.05 Right to Decline Trades
    • Section 304
      Good Faith Deposits
      • 304.01 Deposit Required
      • 304.02 Minimum Good Faith Deposit
      • 304.03 Breakage Fee for Failed Delivery
      • 304.04 Letters of Credit
    • Section 305
      Commitment Terms and Procedures
      • 305.01 General Commitment Provisions
        • 305.01 A Submission Guidance
        • 305.01 B MBS Submissions
      • 305.02 Confirmation of the Commitment
      • 305.03 Commitment Modifications
        • 305.03 A Change Requests
        • 305.03 B Rate Lock Extensions
        • 305.03 C Commitment Extensions
    • Section 306
      ASAP Contracts
      • 306.01 ASAP Options
      • 306.02 Lender Eligibility for ASAP Options
    • Section 307
      Choice Refinance Loans
  • Chapter 4
    Delivery Procedures – Data
    • Section 401
      General
      • 401.01 Timing of Delivery
      • 401.02 Submission of Mortgage Loan Information
      • 401.03 ASAP Data Submission
      • 401.04 Requirements for Mortgage Loan Purchase
      • 401.05 Failure to Comply with Deadlines; Changing the MBS Book-Entry Date
      • 401.06 Wiring Instructions
      • 401.07 Payee Codes for Wiring Cash Mortgage Loan Proceeds
    • Section 402
      MBS Specific Delivery Requirements
      • 402.01 MBS Delivery Options
        • 402.01 A Same Month Pooling
        • 402.01 B Standard Delivery Option
      • 402.02 Special Characteristics and Additional Disclosure
      • 402.03 Confirming Pre-settlement MBS Issuance Information
  • Chapter 5
    Delivery Procedures – Documents
    • Section 501
      General
      • 501.01 Custodian
      • 501.02 Delivery
        • 501.02 A Delivery Deadline; Timing of Document Delivery
        • 501.02 B Location of Delivery
        • 501.02 C Format of Delivery
      • 501.03 Warehouse Lender and Bailee Letter
      • 501.04 Review of Mortgage Loan Delivery Package
      • 501.05 Failure to Deliver: Return of Package
    • Section 502
      The Mortgage Loan Delivery Package Contents
      • 502.01 Mortgage Loan Delivery Documents
      • 502.02 Mortgage Loan Delivery Package Folders
      • 502.03 Participation Interests
      • 502.04 ASAP Deliveries
  • Chapter 6
    Purchase Procedures
    • Section 601
      General
      • 601.01 Timing of Purchase
      • 601.02 C&D Notification of Purchase
      • 601.03 Fannie Mae Loan Number
    • Section 602
      Purchase Amount; Accrued or Prepaid Interest
    • Section 603
      MBS Funding and Delivery Methods
      • 603.01 Third Party MBS Investor Delivery Paths
        • 603.01 A Delivery versus Payment
        • 603.01 B Delivery Direct to the Investor
      • 603.02 Trades with Multifamily Trading Desk - Original Issue Settlement
    • Section 604
      Disclosure for MBS Mortgage Loans
      • 604.01 Multifamily MBS Base Prospectus
      • 604.02 Prospectus Supplement (Prior to December, 2017)
      • 604.03 Additional Disclosure
      • 604.04 Lender Disclosure Obligations
    • Section 605
      Purchase Procedures for Cash Mortgage Loans
      • 605.01 Disbursement of Purchase Proceeds
      • 605.02 Purchase Advice
    • Section 606
      ASAP
Part IV B
Mortgage Loan Commitment, Delivery, and Purchase Procedures for Special Product Features and Executions
  • Chapter 1
    Early Rate Lock
  • Chapter 2
    Streamlined Rate Lock
    • Section 201
      General
      • 201.01 Eligible Mortgage Loans
      • 201.02 Pre-Review Mortgage Loans
      • 201.03 Commitment Terms
        • 201.03 A Rate Lock Period; Delivery Timing
        • 201.03 B Minimum Rate Lock Amount for Trades with the Multifamily Trading Desk; Dual Commitment Option
        • 201.03 C Commitment Modifications
      • 201.04 Basic Streamlined Rate Lock Mortgage Loan Requirements
        • 201.04 A General
        • 201.04 B Good Faith Deposit
        • 201.04 C Delivery Tolerance
        • 201.04 D Green Mortgage Loans
    • Section 202
      Preliminary Underwriting Requirements
    • Section 203
      Rate Lock and Full Underwriting
    • Section 204
      The Lender’s Determination after Completion and Review of the Full Underwriting Package
      • 204.01 Full Underwriting
        • 204.01 A Changes to Rate Lock Amount or Commitment Amount
        • 204.01 B Mortgage Loan Delivery Package
      • 204.02 Lender Determinations after Full Underwriting
        • 204.02 A No Change to the Streamlined Rate Lock, or an Increase or Decrease to the Delivered Mortgage Loan Amount within the Delivery Tolerance
        • 204.02 B Changes to the terms of the Streamlined Rate Lock or the Commitment
        • 204.02 C Waiver to Accept Delivery
        • 204.02 D Non-Delivery of Streamlined Rate Lock Mortgage Loan
    • Section 205
      Dual Commitment Option
      • 205.01 General
      • 205.02 Obtaining Additional Proceeds
  • Chapter 3
    Structured Transactions
    • Section 301
      General
      • 301.01 Transaction Registration
        • 301.01 A Two System Registration
        • 301.01 B Registration Timing
      • 301.02 Structured Transaction Approval
    • Section 302
      Pricing and Fees
      • 302.01 Pricing
      • 302.02 Fees
    • Section 303
      Loan Documents
    • Section 304
      Rate Lock
    • Section 305
      Commitment/Approval Processes
      • 305.01 MBS Mortgage Loans
      • 305.02 Cash Mortgage Loans
    • Section 306
      Delivery Procedures
      • 306.01 Deal Participant and Collateral Data Delivery (Step 1)
        • 306.01 A Submission of Data
        • 306.01 B Timing
      • 306.02 Underwriting Documents (Step 2)
      • 306.03 Interest Rate Hedge (Step 3)
        • 306.03 A Timing of Hedge Acquisition
        • 306.03 B Hedge Data
      • 306.04 Certification of Structured Transaction Loan Documents (Step 4)
        • 306.04 A Credit Facilities
        • 306.04 B Bulk Deliveries
      • 306.05 Pool and Mortgage Loan Data Submission (Step 5)
        • 306.05 A MBS Mortgage Loans
        • 306.05 B Cash Mortgage Loans
    • Section 307
      MBS Disclosure
    • Section 308
      Features
      • 308.01 Collateral Activity
        • 308.01 A Collateral Addition - Add New Collateral to an Existing Structured Transaction
        • 308.01 B Collateral Release - Request a Release of Collateral from an Existing Structured Transaction
        • 308.01 C Collateral Substitution - Substitute Collateral into an Existing Structured Transaction
      • 308.02 Conversion to Fixed Rate
      • 308.03 Borrow-Up Approval and Funding
      • 308.04 Additional Activities
Part V
Servicing and Asset Management
  • Chapter 1
    General Servicing Requirements, and Servicing for Loan Documents and Specialty Products
    • Section 101
      Servicing – General
    • Section 102
      Servicing Standard
    • Section 103
      Servicing Files
    • Section 104
      Loan Document Servicing
    • Section 105
      Uniform Commercial Code Financing Statements
      • 105.01 Documentation and Filing Requirements
      • 105.02 UCC Renewals or Continuations and Amendments and Terminations
    • Section 106
      Administrative Duties Relating to Letters of Credit
      • 106.01 Retention in Servicing File
      • 106.02 Submission of Certification
      • 106.03 Forwarding New, Replacement or Amended Letters of Credit
      • 106.04 Verification of Issuer Rating
      • 106.05 Documenting Rating in Servicing File
      • 106.06 When Issuer Rating Fails to Meet Standard
      • 106.07 Monitoring Expiration Dates
      • 106.08 Draws on the Letter of Credit
      • 106.09 Release/Reduction of Letter of Credit or Other Collateral
      • 106.10 Replacement Letters of Credit
    • Section 107
      Bond Transactions and Credit Enhancement Mortgage Loans
      • 107.01 Borrower Obligations
        • 107.01 A Compliance with Reimbursement Agreement or Loan Agreement, and Other Loan Documents
        • 107.01 B Payment of Fees
        • 107.01 C Other Fees
        • 107.01 D Timing of Payments
        • 107.01 E Principal Reserve Fund
      • 107.02 Security Instrument; Collateral Agreements; Uniform Commercial Code Filings
        • 107.02 A General
        • 107.02 B Cash Collateral Agreement
        • 107.02 C Investment of Collateral
        • 107.02 D Monitoring Uniform Commercial Code Filings
      • 107.03 Remarketing Agent Changes
  • Chapter 2
    Reporting and Remitting
    • Section 201
      Generally
    • Section 202
      Collection, Tracking and Reporting of Monthly P&I Payments and T&I Amounts
    • Section 203
      Reporting Loan Activity and Security Balance
      • 203.01 Use of Fannie Mae eServicing System
      • 203.02 Reporting Specific Transactions
      • 203.03 Monthly Activity Reporting
        • 203.03 A When to Begin Reporting
        • 203.03 B Cutoff Dates for Loan Activity Reporting
        • 203.03 C Cash Mortgage Loan – Reporting Remittance Amount
      • 203.04 Monthly Securitized Mortgage Loan Security Balance Reporting
        • 203.04 A Reporting Security Balances
        • 203.04 B Same Month Pooling – Security Balance for First Reporting Cycle
        • 203.04 C Security Balances Due by Second Business Day
        • 203.04 D Failure to Meet Reporting Deadline
      • 203.05 Due Dates for Reports
        • 203.05 A Removal Transactions
        • 203.05 B All Other Transactions
      • 203.06 Mortgage Loan Activity Record
        • 203.06 A Payment Collection
        • 203.06 B Fee Collection
        • 203.06 C Mortgage Loan Status
      • 203.07 Reports Generated by Fannie Mae
        • 203.07 A MBS Mortgage Loan Reports
        • 203.07 B Cash Mortgage Loan and MBS Mortgage Loan Reports
      • 203.08 Monthly MBS Mortgage Loan Reconciliations - Pool-to-Security Balance Reconciliations (Not Applicable to PFP MBS)
        • 203.08 A Reconciliation Required
        • 203.08 B Rounding Adjustment
        • 203.08 C Required Annual Adjustment to Correct Principal Balance vs. Security Balance Difference
        • 203.08 D Pool-to-Security Reconciliation Certification
    • Section 204
      Calculation of Interest Due
      • 204.01 Generally
      • 204.02 Calculating Interest Due
        • 204.02 A Actual/360 Interest Calculation Method
        • 204.02 B 30/360 Interest Calculation Method
    • Section 205
      ARM Mortgage Loan Interest Rate and Monthly Payment Changes
      • 205.01 Adjustable Rate Mortgage Loan Interest Rate Changes and Required Monthly Payments
        • 205.01 A The Adjustable Rate Mortgage Loan Index
        • 205.01 B Determining the New Monthly Payment
      • 205.02 Monthly Reporting for ARM Payment/Rate Changes
      • 205.03 Structured ARM Loans
    • Section 206
      Application of Monthly Payments
      • 206.01 Fannie Mae Form Loan Documents
      • 206.02 Non-Fannie Mae Form Loan Documents
    • Section 207
      Payment Shortages
    • Section 208
      Delinquency and Servicing Advances
      • 208.01 Generally
        • 208.01 A Applicability
        • 208.01 B Delinquency Advances on a Mortgage Loan other than a Credit Enhancement Mortgage Loan
        • 208.01 C Delinquency Advances on a Credit Enhancement Mortgage Loan
        • 208.01 D Servicing Advances on a Mortgage Loan other than a Credit Enhancement Mortgage Loan
        • 208.01 E Servicing Advances on a Credit Enhancement Mortgage Loan
      • 208.02 Duration of Payment of Delinquency Advances or Servicing Advances
        • 208.02 A Obligation to Make Delinquency Advances
        • 208.02 B Obligation to Make Servicing Advances
        • 208.02 C Reimbursement for Delinquency and Servicing Advances
      • 208.03 Repayment of Servicing Advances from Borrower
      • 208.04 No Capitalization of Servicing Advances for Securitized Mortgage Loans
      • 208.05 Entitlement to Default Interest
    • Section 209
      Remittance Procedures
      • 209.01 Definitions
        • 209.01 A Interest Distribution Amount
        • 209.01 B Principal Distribution Amount
        • 209.01 C Monthly Remittance
        • 209.01 D Remittance Dates
      • 209.02 Monthly P&I Remittance Dates for Cash and MBS Transactions
      • 209.03 Remittance Dates for Cash Mortgage Loan Payoffs
      • 209.04 Use of Cash Remittance System and Requirements
      • 209.05 Cash Mortgage Loans – Transmitting the Remittance
        • 209.05 A Use of Cash Remittance System
        • 209.05 B Required Date for Commencement of Remittance
        • 209.05 C Remittance Transaction Codes
      • 209.06 Securitized Mortgage Loans – Drafting the Remittance – Funds Drafted under Automated Drafting System (Not Applicable to PFP MBS)
      • 209.07 Additional Requirements for Monthly Remittance for Security Transactions
        • 209.07 A Amount of Security Monthly Remittance
        • 209.07 B Security Interest Distribution Amount
      • 209.08 Securitized Mortgage Loans – Remitting Fees to Fannie Mae
        • 209.08 A Guaranty Fee Due on 7th Calendar Day of Month
        • 209.08 B Guaranty Fee Remittance
        • 209.08 C Same Month Pooling – Interest and Guaranty Fee Remittance for First Reporting Cycle
      • 209.09 Notification to Fannie Mae if Unable to Have Funds Available on any Remittance Date
    • Section 210
      Full Prepayments
      • 210.01 Review of Applicable Loan Documents Required
      • 210.02 Notification of Prepayment; Timing of Prepayment
        • 210.02 A Notice and Timing Consistent with Loan Documents
        • 210.02 B Borrower Notice Must Contain Date of Intended Prepayment and Comply with Notice Requirements of the Loan Documents
        • 210.02 C Loan Document Requirements for Payoff and Lockout Dates
        • 210.02 D Notice to Fannie Mae of Proposed Payoff; Use of Fannie Mae Payoff Calculator
      • 210.03 Timing of Confirmation of the Full Prepayment Payoff Amount
      • 210.04 Full Prepayment for Cash Transactions and PFP MBS
        • 210.04 A Confirming the Full Prepayment Payoff Amount
        • 210.04 B Reporting Full Prepayment Payoff Amount
        • 210.04 C Remitting Full Prepayment Payoff Amount
      • 210.05 Full Prepayment for Securitized Transactions (Not Applicable to PFP MBS)
        • 210.05 A Confirming the Full Prepayment Payoff Amount
        • 210.05 B Reporting Full Prepayment Payoff Amount
        • 210.05 C Remitting Full Prepayment Payoff Amount
    • Section 211
      Partial Prepayments Not From Insurance or Condemnation Proceeds
      • 211.01 Partial Prepayments Generally Prohibited
      • 211.02 Partial Prepayment Procedures
        • 211.02 A Servicer’s Analysis of Loan Documents
        • 211.02 B Fannie Mae Approval Required for Partial Prepayments
        • 211.02 C Prepayment Premium Due on Partial Prepayment
        • 211.02 D Reporting and Remitting Partial Prepayments When Not Permitted in Loan Documents
        • 211.02 E Reporting and Remitting Partial Prepayments When Permitted in Loan Documents
    • Section 212
      Prepayments (Full or Partial) Involving Insurance Proceeds or Condemnation Awards
      • 212.01 Partial Prepayments Generally Permitted
      • 212.02 No Prepayment Premium Required
      • 212.03 Reporting and Remitting Partial Prepayments
    • Section 213
      Prepayment Premium Sharing
      • 213.01 General
      • 213.02 Yield Maintenance Prepayment Premiums – Prepayment Occurs Before the Yield Maintenance Period End Date
        • 213.02 A Calculation of Total Prepayment Premium
        • 213.02 B Calculation of Investor’s Share of Total Prepayment Premium for a Securitized Mortgage Loan
        • 213.02 C Calculation of Fannie Mae’s Share of Total Prepayment Premium
        • 213.02 D Calculation of Servicer’s Share of Total Prepayment Premium
      • 213.03 Yield Maintenance Prepayment Premiums – Prepayment Occurs On or After the Yield Maintenance Period End Date
        • 213.03 A Prepayment On or After Yield Maintenance Period End Date
        • 213.03 B Prepayment During Open Period
      • 213.04 Fixed Rate Mortgage Loans with Graduated Prepayment Premiums
      • 213.05 Prepayment Premiums for ARM Loans and Structured ARM Loans
      • 213.06 Prepayment Premium Waivers; Servicer’s Share of Prepayment Premium
    • Section 214
      Maturing Mortgage Loans/Payoffs
      • 214.01 Balloon Mortgage Loans
      • 214.02 Servicer Notification of Payoff Amount to Borrower
      • 214.03 Calculating and Obtaining Confirmation of Payoff Amount
        • 214.03 A Calculating the Full Payoff Amount
        • 214.03 B Fannie Mae Will Not Confirm Nor Is Responsible for Amounts Owing to Servicer
        • 214.03 C Fannie Mae Confirmation of Full Payoff Amount
        • 214.03 D No Quote to Borrower Until Fannie Mae Confirmation
      • 214.04 Reporting the Payoff and Remitting the Payoff Funds
        • 214.04 A Reporting Full Payoff Amount Through the eServicing System Due By 2nd Business Day of Month
        • 214.04 B Remitting Full Payoff Amount
    • Section 215
      Post-Payoff Actions
      • 215.01 Servicer Required Actions
        • 215.01 A General
        • 215.01 B Individual Mortgage Loan Releases
      • 215.02 Post Payoff Document Retention Requirements
    • Section 216
      DUS Bond Credit Enhancement Transactions – Reporting and Remitting Requirements
      • 216.01 Monthly Bond Credit Enhancement Reporting
      • 216.02 Monthly Remittance Procedures
        • 216.02 A Monthly Remittances of Scheduled Payments to Bond Trustee
        • 216.02 B Replenishment of Withdrawals from the PRF
        • 216.02 C Collection and Remittance of Borrower Reimbursement Obligations for Fannie Mae Advances
        • 216.02 D Monthly Remittance of Fees to Fannie Mae
        • 216.02 E Notice and Collection of Other Fees and Expenses
      • 216.03 Prepayments – General Introduction
        • 216.03 A Bond Redemption Premiums Payable to Bondholders
        • 216.03 B Termination Fee or Prepayment Premium Payable to Fannie Mae
        • 216.03 C Termination When No Prepayment Occurs; Weekly Variable Rate Transactions
      • 216.04 Prepayments – Processing
        • 216.04 A General
        • 216.04 B Prompt Notice of Intended Prepayment
        • 216.04 C Critical Path Due Dates
        • 216.04 D Fannie Mae’s Confirmation Required
      • 216.05 Prepayments: Prepayment Reporting
      • 216.06 Prepayments: Remittances
      • 216.07 Reporting on Delinquency Status
    • Section 217
      Mezzanine Loan Reporting and Remitting
      • 217.01 Remitting DUS Plus Mezzanine Loans
      • 217.02 Payoffs
    • Section 218
      Defeasance
      • 218.01 Mortgage Loan Documents Must Permit Defeasance
      • 218.02 Borrower’s Election to Defease
      • 218.03 Defeasance Option Procedures
        • 218.03 A Defeasance Documents
        • 218.03 B Defeasance Notice
        • 218.03 C Defeasance Commitment Fee
        • 218.03 D Verification of the Defeasance Notice
        • 218.03 E Substitute Collateral
        • 218.03 F Assignment and Assumption
        • 218.03 G Closing Documents
        • 218.03 H Amounts Payable by Borrower
        • 218.03 I Defeasance Deposit
        • 218.03 J Release
        • 218.03 K Fannie Mae Security Liquidated Damages
        • 218.03 L Third-Party Costs
        • 218.03 M Post Defeasance Closing Date
    • Section 219
      Delinquency Reporting and Certification
    • Section 220
      Reporting Collateral Balances in Custodial Accounts
      • 220.01 P&I Custodial Accounts
      • 220.02 Letters of Credit as Collateral
      • 220.03 Report on Fair Value Basis
      • 220.04 What to Report
      • 220.05 When to Report
    • Section 221
      Internal Revenue Service Reporting Requirements
      • 221.01 What to Report
      • 221.02 Filing IRS Form 1099 MISC
      • 221.03 Notifying the Internal Revenue Service about Abandonments or Acquisitions (IRS Form 1099-A)
        • 221.03 A When Required
        • 221.03 B Preparing IRS Form 1099-A
      • 221.04 Notifying the Internal Revenue Service about Cancellations of Indebtedness (IRS Form 1099-C)
        • 221.04 A When Required
        • 221.04 B Determining When a Debt Is Cancelled
        • 221.04 C Preparing IRS Form 1099-C
        • 221.04 D Exceptions to IRS Form 1099-C Reporting
        • 221.04 E Coordination with Reporting Abandonments or Acquisitions
      • 221.05 Reporting via Magnetic Media
  • Chapter 3
    Custodial Account Requirements
    • Section 301
      Custodial Accounts
      • 301.01 General
      • 301.02 Custodial Account Types, Investments, and Depositories
        • 301.02 A Custodial Account Requirements and Investments
        • 301.02 B Eligible Depositories
        • 301.02 C Verifying Depository Ratings
        • 301.02 D Fannie Mae’s Rights in Custodial Accounts
      • 301.03 Required Custodial Accounts
      • 301.04 Servicer Liability
        • 301.04 A Responsibility of Servicer
        • 301.04 B Servicer Liable for Losses
        • 301.04 C No Reimbursement for Losses
        • 301.04 D Overdrafts Not Permitted
    • Section 302
      Establishment of Custodial Accounts
      • 302.01 Notification Requirements
        • 302.01 A Establishment of a Custodial Account
        • 302.01 B Changes to a Custodial Account
        • 302.01 C Termination of a Custodial Account
      • 302.02 Titling of Custodial Accounts
      • 302.03 Daily Cutoff
    • Section 303
      P&I Custodial Accounts
      • 303.01 Purpose of P&I Custodial Accounts
      • 303.02 P&I Commingling Restrictions
        • 303.02 A Maintain Multiple P&I Custodial Accounts
        • 303.02 B No Commingling Permitted
      • 303.03 Withdrawals from P&I Custodial Accounts
      • 303.04 Use as a Clearing Account Not Permitted
    • Section 304
      Tax and Insurance Custodial Accounts
      • 304.01 Purpose of T&I Custodial Accounts
      • 304.02 T&I Commingling Restrictions
      • 304.03 Prohibited Use of T&I Custodial Account Funds
    • Section 305
      Collateral Agreement Custodial Accounts
      • 305.01 Purpose of Collateral Agreement Custodial Accounts
      • 305.02 Commingling Restrictions
    • Section 306
      Interest-Bearing Accounts
      • 306.01 Interest-Bearing Account Requirements
      • 306.02 Loan Documents May Require Interest-Bearing Accounts
    • Section 307
      Clearing Accounts
      • 307.01 Clearing Accounts Permitted
      • 307.02 Custodial Account Requirements Applicable to Clearing Accounts
      • 307.03 Clearing Account Activity Guidelines
        • 307.03 A Timing for Crediting to Custodial Account
        • 307.03 B Debit and Credit Memos Permitted
        • 307.03 C Using Checks
        • 307.03 D Insufficient Funds Checks
        • 307.03 E Records and Audit Trails
    • Section 308
      Drafting Accounts
      • 308.01 Establishing Drafting Accounts
      • 308.02 Consolidated Custodial Account
        • 308.02 A Distinct Custodial Accounts for Securitized Mortgage Loans (Other Than PFP MBS)
        • 308.02 B Timely Remittance
        • 308.02 C Commingling of P&I Funds Permitted for Cash Executions
        • 308.02 D Commingling of P&I Funds Permitted for Securitized Mortgage Loans
        • 308.02 E Separate Accounts for P&I Funds Permitted
        • 308.02 F Corporate/General Lender Accounts Not Permitted
        • 308.02 G Timing of Commingling
        • 308.02 H Election of Cash Remittance System or Automated Drafting System Required
        • 308.02 I Required Records
    • Section 309
      Custodial Account Reconciliations
    • Section 310
      Taxes, Assessments, Insurance Premiums, and Other Charges/Obligations
      • 310.01 Taxes and Insurance and Other Custodial Accounts
      • 310.02 Collections for T&I and Other Obligations
        • 310.02 A T&I and Other Obligations
        • 310.02 B Collections for T&I Obligations
        • 310.02 C No Financing for T&I Obligations
      • 310.03 Interest Earned on T&I and Other Custodial Accounts
      • 310.04 Accounting for T&I Custodial Accounts
      • 310.05 Commingling of Funds in T&I Custodial Accounts
      • 310.06 T&I Account Shortfalls
      • 310.07 Periodic Analysis of Borrower’s T&I Obligations and Custodial Account Collections
        • 310.07 A Timing of Analysis
        • 310.07 B Insufficient Borrower Funds
        • 310.07 C Custodial Account Surplus
      • 310.08 Annual T&I Custodial Account Statements
  • Chapter 4
    Asset Management: Loan Document Administration
    • Section 401
      Servicing Requirements
      • 401.01 General
      • 401.02 Monitoring Compliance with Loan Documents
    • Section 402
      Delegation of Decision-Making Authority; Retention of Outside Legal Counsel
      • 402.01 Delegation of Decision-Making Authority
      • 402.02 Retention of Outside Legal Counsel
    • Section 403
      Execution of Documents by Servicer – Limited Power of Attorney
    • Section 404
      Execution of Documents by Fannie Mae
      • 404.01 Submission of Documents to Fannie Mae
      • 404.02 Servicer Certification When Fannie Mae Approval Is Not Required
      • 404.03 Servicer Certification When Fannie Mae Approval Is Required
    • Section 405
      Fees Due to Fannie Mae
    • Section 406
      Follow-Up Actions by the Servicer
    • Section 407
      Subordinate Financing
      • 407.01 Non-Fannie Mae Subordinate Financing
      • 407.02 Prerequisite for Subordinate Financing
      • 407.03 Fees for Subordinate Financing
      • 407.04 Submitting the Request for Subordinate Financing
      • 407.05 Fannie Mae Approval and Execution
      • 407.06 Subsequent Servicer Actions
    • Section 408
      Administration of Collateral Agreements
      • 408.01 General Administrative Requirements
        • 408.01 A Administration of Funds
        • 408.01 B Funds to be Held in a Custodial Account
        • 408.01 C Use of Funds
        • 408.01 D Funds as Additional Security for Mortgage Loan
        • 408.01 E Servicer’s Fees and Costs
        • 408.01 F Waiver or Modification of Terms of Collateral Agreement
      • 408.02 Achievement Agreement or Other Agreement for Additional Collateral
        • 408.02 A General
        • 408.02 B Releases or Reductions in Collateral
        • 408.02 C Draws on Letters of Credit or Application of Other Collateral
      • 408.03 Completion/Repair Agreement
        • 408.03 A General
        • 408.03 B Extensions for Completion/Repair Agreement
        • 408.03 C Amendments to Completion/Repair Agreements
        • 408.03 D Servicer’s Administrative Requirements
        • 408.03 E Processing Borrower Requisitions
        • 408.03 F Inspections
        • 408.03 G Fees
        • 408.03 H Default under Completion/Repair Agreement
      • 408.04 Replacement Reserve
        • 408.04 A General
        • 408.04 B Amendments to Replacement Reserve Schedules
        • 408.04 C Servicer’s Administrative Requirements
        • 408.04 D Modifications to Replacement Reserve Deposits
        • 408.04 E New Property Condition Assessments
        • 408.04 F When Replacement Reserve Funding Was Partially or Fully Waived
        • 408.04 G Interest on Replacement Reserve Funds
        • 408.04 H Items Eligible for Funding from the Replacement Reserve
        • 408.04 I Items Not Eligible for Funding from the Replacement Reserve
        • 408.04 J Processing Borrower Requisitions
        • 408.04 K Inspections
        • 408.04 L Fees
        • 408.04 M Default under Replacement Reserve Schedule
        • 408.04 N Return of Replacement Reserve Funds to Borrower
        • 408.04 O Alternative Funding of Replacement Reserves for Portfolio Mortgage Loans
    • Section 409
      Interest Rate Hedge Requirements
      • 409.01 General
      • 409.02 Interest Rate Hedge Coverage
        • 409.02 A Bond Credit Enhancement Transactions
        • 409.02 B Structured Transactions
        • 409.02 C All Hedges
      • 409.03 Interest Rate Hedge Term
      • 409.04 Lien Filings and Collateral
      • 409.05 Borrower Payments
        • 409.05 A Interest Rate Caps
        • 409.05 B Interest Rate Swaps
      • 409.06 Provider Ratings
      • 409.07 Replacement Interest Rate Hedge and Notification
      • 409.08 Replacement Interest Rate Hedge Documents and Follow Up
    • Section 410
      Ground Leases
    • Section 411
      Notice of Lien or Non-Compliance with Applicable Laws, Ordinances and Regulations
    • Section 412
      Property Forfeitures and Seizures
    • Section 413
      Property and Liability Insurance
      • 413.01 Property and Liability Insurance
      • 413.02 No Financing for Property and Liability Insurance Premiums
      • 413.03 Flood Map Changes; Obtaining Flood Insurance
      • 413.04 Lender Placed Insurance
        • 413.04 A Property and Liability Insurance
        • 413.04 B Flood Insurance
        • 413.04 C Servicer’s Administrative Costs and Expenses
    • Section 414
      Casualty Losses – Performing Mortgage Loans
      • 414.01 Notice
      • 414.02 Filing Proof of Loss
      • 414.03 Casualty Loss Assessment
      • 414.04 Required Casualty Loss Property Inspection
      • 414.05 Documentation for Required Casualty Loss Property Inspections
      • 414.06 Endorsement of Insurance Loss Draft or Check When Payable to Fannie Mae
      • 414.07 Endorsement of Insurance Loss Draft or Check When Not Payable to Fannie Mae
      • 414.08 Insurance Loss Draft or Check Not Payable to Either Fannie Mae or Servicer
      • 414.09 Application of Insurance Loss Proceeds
        • 414.09 A Fannie Mae Determination Required
        • 414.09 B Disposition of Insurance Loss Proceeds
      • 414.10 Property Restoration Requirements
      • 414.11 Commencement of Repair/Restoration Work
      • 414.12 Disbursements
        • 414.12 A Prerequisites for Disbursement of Funds
        • 414.12 B Disbursing Funds
        • 414.12 C Content of Disbursement Request
        • 414.12 D Disbursement Amount
        • 414.12 E Final Disbursement; Notice to Fannie Mae
        • 414.12 F Documentation in Servicing File
      • 414.13 Borrower’s Failure to Diligently Pursue Repair
      • 414.14 Reimbursement of Administrative Costs
    • Section 415
      Casualty Losses – Non-Performing Mortgage Loans
    • Section 416
      Credit Facilities and Bulk Deliveries
      • 416.01 General
      • 416.02 Delegation of Decisions
        • 416.02 A Decisions and Actions Not Delegated
        • 416.02 B Decisions Delegated by the Delegated Transaction Form 4636 series
        • 416.02 C Other Delegated Decisions and Actions
      • 416.03 Approval Requests
      • 416.04 Release and Substitution Requests
      • 416.05 Facility Revaluations
      • 416.06 Supplemental Mortgage Loans Not Permitted
      • 416.07 Additional Information
    • Section 417
      Seniors Housing Properties
      • 417.01 General
      • 417.02 Decisions and Actions Delegated and Not Delegated
      • 417.03 Approval Requests
      • 417.04 Seniors Housing Expansion/Conversion Requests
        • 417.04 A Permitted Purpose
        • 417.04 B Submission Requirements
        • 417.04 C Requirements and Monitoring
        • 417.04 D Construction Completion Requirements
        • 417.04 E Request Changes in Unit Count/Mix in the MAMP
    • Section 418
      Asset Management for Credit Enhancement Mortgage Loans and Multifamily Affordable Housing Properties
      • 418.01 Bond Transactions and Credit Enhancement Mortgage Loans
      • 418.02 Compliance Issues Relative to Bond Credit Enhancement Transactions
      • 418.03 Monitoring Compliance; Notification of Noncompliance
        • 418.03 A Affordable Regulatory Agreement
        • 418.03 B Default Notice for Failure to Comply with the Bond Documents
      • 418.04 Multifamily Affordable Housing (MAH) Properties
      • 418.05 Low-Income Housing Tax Credits
      • 418.06 Enhanced Resident Services
      • 418.07 Restabilization Reserve
  • Chapter 5
    Surveillance
    • Section 501
      General
    • Section 502
      Property Inspections
      • 502.01 MBA Master Inspection Form
      • 502.02 Mortgage Loans with Property Condition Concerns (Not Limited to Watchlist Loans)
      • 502.03 Property Inspection Protocols
      • 502.04 Property Inspection Frequency; Submission of Property Inspection Forms
        • 502.04 A Timing of Property Inspections
        • 502.04 B Submission of Property Inspection Forms
      • 502.05 Property Inspector Qualifications
        • 502.05 A Minimum Inspector Experience
        • 502.05 B Third-Party Inspector Requirements
      • 502.06 Content of Property Inspections
        • 502.06 A Number of Units to be Inspected; “Down” Units
        • 502.06 B Selection of Units to be Inspected
        • 502.06 C Photographs
        • 502.06 D Consultation with Property Manager and Staff
        • 502.06 E Analysis of Market
        • 502.06 F Analysis of Collateral
        • 502.06 G Life Safety Issues
      • 502.07 Servicer Property Inspection Quality Control Requirements
        • 502.07 A Review of Inspection Forms
        • 502.07 B Quality Control Program
      • 502.08 Retention of Inspection Forms
      • 502.09 Other Property Inspections; Inspection Fees
      • 502.10 PCA Frequency
    • Section 503
      Quarterly and Annual Financial Analysis of Operations
      • 503.01 Electronic Reporting of Financial Analysis of Operations
      • 503.02 Request for Waivers of Quarterly and Annual Reporting on Financial Analysis of Operations
        • 503.02 A Waivers for Reasons Other Than Unresponsive Borrowers
        • 503.02 B Waivers due to Unresponsive Borrowers
      • 503.03 Quarterly Reporting on Financial Analysis of Operations
        • 503.03 A Quarterly Reporting Requirements
        • 503.03 B Quarterly Submission Requirements by Asset Class
      • 503.04 Annual Reporting on Financial Analysis of Operations
        • 503.04 A Annual Financial Analysis Reporting Requirements
        • 503.04 B Submitting the Annual Financial Analysis of Operations
        • 503.04 C Annual Review
        • 503.04 D Asset Management Testing
        • 503.04 E Maintenance of Records
    • Section 504
      Compliance with Loan Agreement Requirements
      • 504.01 General
      • 504.02 Obtaining Required Financial and other Reporting Items
        • 504.02 A Notice to the Borrower
        • 504.02 B Annual Reporting of Guarantor Financial Condition
        • 504.02 C Failure of Borrower to Provide Required Guarantor Financial Reporting
        • 504.02 D Lender Review of Required Financial Reporting
        • 504.02 E Maintenance of Annual Financial Reporting Records
  • Chapter 6
    Watchlist Management
    • Section 601
      General
    • Section 602
      Risk Rate and Maintain Servicer Watchlist
    • Section 603
      Servicer Watchlist Classifications and Requirements
      • 603.01 Rating Classifications
        • 603.01 A Pass Asset
        • 603.01 B Pass/Watch Asset
        • 603.01 C Special Mention Asset
        • 603.01 D Substandard Asset
        • 603.01 E Doubtful Asset
      • 603.02 Identification on Servicer Watchlist
      • 603.03 Increased Communication with Fannie Mae
    • Section 604
      Servicer Watchlist Submission
    • Section 605
      Fannie Mae Watchlist
    • Section 606
      Action Plans
      • 606.01 Action Plans for Primary Risk Mortgage Loans
      • 606.02 Information Requests and Action Plans for Secondary Risk Mortgage Loans
      • 606.03 Defaulted Mortgage Loans on Fannie Mae or Servicer Watchlist
    • Section 607
      Property Condition Concerns (Not Limited to Watchlist Loans)
    • Section 608
      Servicer Fees for Workout, Modification, or Reinstatement
    • Section 609
      Fannie Mae Contractors
  • Chapter 7
    Non-Performing Mortgage Loans
    • Section 701
      Generally
    • Section 702
      Secondary Risk Mortgage Loans and Primary Risk Mortgage Loans
      • 702.01 Generally
      • 702.02 Secondary Risk Mortgage Loans
        • 702.02 A Definition
        • 702.02 B Lender is Special Servicer
        • 702.02 C Deemed Exhaustion of Recourse Obligation
      • 702.03 Primary Risk Mortgage Loans Defined
        • 702.03 A Definition
        • 702.03 B Fannie Mae is Special Servicer
    • Section 703
      Mortgage Loan Defaults
      • 703.01 Anticipatory Defaults
      • 703.02 Performance Defaults
        • 703.02 A Failure of Borrower to Perform
        • 703.02 B Service of Process
        • 703.02 C Lender Tenders for Minor or Immaterial Defaults
      • 703.03 Monetary or Payment Defaults
      • 703.04 Date of Default
        • 703.04 A Definition of Date of Default
        • 703.04 B Definition of Non-Performing Mortgage Loan
        • 703.04 C Partial Payments by Borrower Do Not Change Date of Default
      • 703.05 Late Charges and Default Interest
        • 703.05 A Timing for Imposition of Late Charges and Default Interest
        • 703.05 B Late Charges and Default Interest
        • 703.05 C No Deduction for Late Charges or Default Interest
        • 703.05 D Enforceability of Late Charges and Default Interest
    • Section 704
      Notice of Default; Reservation of Rights
      • 704.01 Notice of Default
        • 704.01 A Notice to Fannie Mae of Payment Default
        • 704.01 B Notice to Fannie Mae of Performance Default
        • 704.01 C Types of Performance Defaults
        • 704.01 D Contact with Borrower
        • 704.01 E Pre-Negotiation Letter
      • 704.02 Partial Payments; Late Payments
        • 704.02 A Partial Payments
        • 704.02 B Late Partial Payment
        • 704.02 C Full Payment After Expiration of Period Before Assessing Late Charges
        • 704.02 D Application of Partial Payments
        • 704.02 E Failure to Make Any Payment
        • 704.02 F Copies of Letters Sent to Borrower; Correspondence with Borrower
    • Section 705
      Capital Repairs and Protection of Property and Property Income
      • 705.01 Funding Capital Repairs During Default Resolution
        • 705.01 A Generally
        • 705.01 B Health and Safety Repairs
      • 705.02 Protection of Property Income
      • 705.03 Property Management Changes
        • 705.03 A Primary Risk Mortgage Loans
        • 705.03 B Secondary Risk Mortgage Loans
        • 705.03 C Approval Decision Criteria and Timing
        • 705.03 D Documenting the Property Management Change
    • Section 706
      Reinstatement; Calculation of Payoff Amount
      • 706.01 Reinstatement
        • 706.01 A Primary Risk Mortgage Loans
        • 706.01 B Secondary Risk Mortgage Loans
      • 706.02 Calculation of Payoff Amount
    • Section 707
      Non-Performing Primary Risk Mortgage Loans – Transfers to Fannie Mae Special Asset Management
      • 707.01 Transfer to Special Servicing
      • 707.02 Asset Review
    • Section 708
      Non-Performing Secondary Risk Mortgage Loans – Special Servicing
      • 708.01 Servicer Performs Loss Mitigation Actions
      • 708.02 Servicer Workout Action Template (“SWAT”)
        • 708.02 A Delivery of SWAT
        • 708.02 B Purpose of SWAT
        • 708.02 C Contents of SWAT
        • 708.02 D Fannie Mae Approves SWAT
        • 708.02 E Fannie Mae does not Approve SWAT
        • 708.02 F Updating SWAT
        • 708.02 G Failure to Timely Deliver SWAT
        • 708.02 H No Credit Against Recourse
    • Section 709
      Special Servicing of Primary Risk Mortgage Loans
      • 709.01 Fannie Mae Performs Loss Mitigation Actions
      • 709.02 Servicing Transfer Memo
    • Section 710
      Engagement of Legal Counsel
      • 710.01 Fannie Mae Retains Legal Counsel
      • 710.02 Primary Risk Mortgage Loans
      • 710.03 Secondary Risk Mortgage Loans
      • 710.04 Payment of Legal Counsel Fees
        • 710.04 A Primary Risk Mortgage Loans
        • 710.04 B Secondary Risk Mortgage Loans
    • Section 711
      Courses of Action
      • 711.01 Election and Implementation of a Course of Action
      • 711.02 Course of Action – Lender Purchase of Mortgage Loan
        • 711.02 A Primary Risk Mortgage Loans
        • 711.02 B Secondary Risk Mortgage Loans
        • 711.02 C Purchase Price for Mortgage Loans
        • 711.02 D No Fannie Mae Approval Required
        • 711.02 E Implementation of Course of Action
      • 711.03 Course of Action – Lender Workout Election
        • 711.03 A Lender Workout Defined
        • 711.03 B Documentation and Terms of Lender Workout
        • 711.03 C Lender Workout Has No Impact on Loss Sharing or Recourse Obligation
        • 711.03 D No Fannie Mae Approval Required
        • 711.03 E Servicer Makes Delinquency Advances But Fails to Report Mortgage Loan Delinquent
        • 711.03 F Foreclosure Process Continues Unless Otherwise Agreed to by Fannie Mae
      • 711.04 Course of Action – A Joint Workout
        • 711.04 A Joint Workout Defined
        • 711.04 B Delinquency Advances Must Be Made During Negotiation of Joint Workout
        • 711.04 C Joint Workout Process
        • 711.04 D Modification, Extension, and Forbearance Fees
        • 711.04 E Triggering Modification Fees; Other Fees
        • 711.04 F Foreclosure Process Continues Unless Otherwise Agreed to by Fannie Mae
      • 711.05 Course of Action - Foreclosure
        • 711.05 A Primary Risk Mortgage Loans
        • 711.05 B Secondary Risk Mortgage Loans
        • 711.05 C Deed-in-Lieu of Foreclosure
        • 711.05 D Management of Property Post Title Vesting in Fannie Mae
        • 711.05 E Deficiency Suits
      • 711.06 Course of Action – Note Sale Election or Discounted Loan Payoff
        • 711.06 A Note Sale and Discounted Loan Payoff Defined
        • 711.06 B Lender Ability to Bid
        • 711.06 C Any Note Sale or Discounted Payoff Gives Rise to Loss Sharing Event
        • 711.06 D Note Sale – Secondary Risk Mortgage Loans
        • 711.06 E Discounted Loan Payoff - Secondary Risk Mortgage Loans
    • Section 712
      Dual Track Approach
      • 712.01 Dual Track Approach Generally
      • 712.02 Waiver of Dual Track Approach
      • 712.03 Track One: Dialogue with the Borrower
        • 712.03 A Purpose of Track One
        • 712.03 B First 30 Calendar Days after a Default
        • 712.03 C Calendar Days 31 through 60 after a Payment Default or Performance Default
        • 712.03 D Cessation of Dialogue with the Borrower
      • 712.04 Track Two: Foreclosure Process
        • 712.04 A The Foreclosure Process
        • 712.04 B REO Management
      • 712.05 Description of Contractual Relationships
        • 712.05 A Two Contractual Relationships
        • 712.05 B No Disclosure of Lender’s Contract Terms to Borrower; Borrower Not a Third-Party Beneficiary of Lender Contract
        • 712.05 C Primary Risk Mortgage Loans
        • 712.05 D Secondary Risk Mortgage Loans
      • 712.06 Asset Audits for Secondary Risk Mortgage Loans
        • 712.06 A Purpose of Asset Audits
        • 712.06 B Personnel Performing Asset Audits
        • 712.06 C Timing of Asset Audits
        • 712.06 D Content of Asset Audits
        • 712.06 E Pre-Negotiation Letter
        • 712.06 F Special Requirements for the Environmental Assessment
      • 712.07 Dual Track Timeline
    • Section 713
      Loss Sharing and the Appraisal Process in connection with a Foreclosure Event
      • 713.01 General
        • 713.01 A Appraisal Required; Defined Terms
        • 713.01 B Compliance with Loss Sharing Addendum
        • 713.01 C Approved Appraisers
        • 713.01 D Appraisal Requirements
        • 713.01 E Appraisal Notice and Election of Appraisal Methodology
      • 713.02 Single Appraisal Approach
        • 713.02 A Single Appraisal Approach Timeline
        • 713.02 B Draft Appraisal Review
        • 713.02 C Acceptable Draft Appraisal
        • 713.02 D Non-Acceptable Draft Approach
      • 713.03 Dual Appraisal Approach
        • 713.03 A Dual Appraisal Approach Timeline
        • 713.03 B Average of Appraised Values
        • 713.03 C Third Appraisal
  • Chapter 8
    In Place Loans
    • Section 801
      General
    • Section 802
      In Place Loan Categories
      • 802.01 Loan Sizing
      • 802.02 Level 2 In Place Loans
      • 802.03 Level 3 In Place Loans
      • 802.04 Level 2 and Level 3 In Place Loans – Generally
    • Section 803
      Eligibility Requirements
    • Section 804
      Underwriting Process
      • 804.01 Generally
      • 804.02 Specific Underwriting Requirements
        • 804.02 A Borrower Structure and Experience
        • 804.02 B Property Management
        • 804.02 C Occupancy
        • 804.02 D Property Zoning, Location, and Condition
    • Section 805
      Appraisals, Inspections and Loan Documentation
      • 805.01 Appraisal
      • 805.02 Physical Condition Assessment
      • 805.03 Environmental Assessment
      • 805.04 Mortgage Loan Documents
      • 805.05 Title Policy and Survey Requirements
        • 805.05 A Title Policy
        • 805.05 B Survey
      • 805.06 Subordinate Debt
    • Section 806
      Fees and Pricing Premiums
      • 806.01 Origination Fees
      • 806.02 Pricing Premiums
      • 806.03 Loan Modification, Extension and Forbearance Fees
Appendix
Glossary
Chapter 5

Surveillance

Section 501

General

Each 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). securing 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. must be monitored by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). to ensure that the BorrowerBorrowerPerson who is the obligor under the Note. continually manages and maintains 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). in accordance with the requirements of the applicable Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. and the GuideGuideMultifamily Selling and Servicing Guide and Delegated Underwriting and Servicing Guide, including any exhibits, appendices, or other referenced forms, as updated, amended, restated, modified, or supplemented by any lender memo; provided, however, if a topic is covered in the Multifamily Selling and….  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). is required to:

  • perform inspections 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). ;
  • perform a financial analysis of the operations of 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
  • report the results of such inspections and financial evaluations to Fannie Mae as required by this Chapter.

The financial analysis of operations should include an annual and, if required for that Asset ClassAsset ClassType of Multifamily Property securing a Mortgage Loan (e.g., conventional, Seniors Housing, Manufactured Housing Community, Cooperative, etc.). , quarterly analysis of the financial performance 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). .

 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). inspections generally should include:

  • an on-site inspection;
  • a current overall 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). rating based on the condition 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). as of the date of the inspection (and not on projected or budgeted repairs);
  • an evaluation 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). ’s market, submarket, and neighborhood; and
  • an analysis of the competitive position 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). .

Based upon the results of its inspections and financial analysis, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must evaluate the performance 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). , and identify any 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 warrants special attention due to management or maintenance issues, or any financial decline that could materially adversely affect the collateral or performance 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. .  If follow-up action is required, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must notify Fannie Mae as provided in this Chapter, and initiate appropriate actions with the BorrowerBorrowerPerson who is the obligor under the Note..

Section 502

Property Inspections

502.01

MBA Master Inspection Form

The Mortgage Bankers Association (MBA) Master Inspection Form must be used for all 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). inspections, unless a Catastrophic EventCatastrophic EventNatural or man-made hazard resulting in an event of substantial extent causing significant physical damage or destruction, loss of life, or drastic change to the natural environment such as earthquake, flood, terrorist attack and windstorm. has occurred, and the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must complete the Fannie Mae 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). inspection rating on the Fannie Mae Assessment Addendum (“Fannie Mae Assmt Addendum”) tab of the MBAMBAMortgage Bankers Association Master Inspection Form.  For any inspection after a Catastrophic EventCatastrophic EventNatural or man-made hazard resulting in an event of substantial extent causing significant physical damage or destruction, loss of life, or drastic change to the natural environment such as earthquake, flood, terrorist attack and windstorm. , the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must instead use the Multifamily Catastrophic Loss Inspection form (Form 4261).

The following tabs of the MBAMBAMortgage Bankers Association Master Inspection Form must be completed for all 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). inspections:

  • General Information Tab (“General Info”);
  • Physical Condition & Deferred Maintenance Tab (“Physical Condition & DM”);
  • Photos Tab (“Photos”);
  • Rent Roll Tab (“Rent Roll”);
  • Maps Tab (“Maps”);
  • Management Interview Tab (“Mgmt Interview”);
  • Multifamily Tab (“Multifamily”);
  • Fannie Mae Assessment Addendum (“Fannie Mae Assmt Addendum”); and
  • For Seniors HousingSeniors HousingMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. properties only: Seniors Supplement Tab (“Senior Supplement”).
502.02

Mortgage Loans with Property Condition Concerns (Not Limited to Watchlist Loans)

Regardless of whether or not 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 listed on either the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. or the Fannie Mae WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. , the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must inform Multifamily InspectionsMultifamily InspectionsTeam that can be contacted at [email protected]  and Multifamily WatchlistMultifamily WatchlistTeam that can be contacted at [email protected]  within 10 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day on which Fannie Mae is closed, day on which the Federal Reserve Bank of New York is closed, or for any MBS and any required withdrawal for remittance thereunder, a day on which the Federal Reserve Bank is closed in the district where any… after becoming aware of 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. with:

  • 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). inspection rating of 4 or 5 as shown on the Fannie Mae Assessment Addendum (“Fannie Mae Assmt Addendum”) tab of the MBAMBAMortgage Bankers Association Master Inspection Form;
  • 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). repairs required by the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. not completed timely;
  • any significant deferred maintenance;
  • any non-significant deferred maintenance that has not been corrected within 12 months after notifying the BorrowerBorrowerPerson who is the obligor under the Note. of such maintenance obligation; or
  • life safety concerns.

In addition, if any of the above 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). condition concerns are present, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must:

  • reinstate any suspended requirements for 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 Replacement ReserveReplacement ReserveCustodial Account established by the Lender and funded by deposits from the Borrower over the term of the Mortgage Loan to fund the replacement of capital items at the Property. unless the rating of 4 or 5 results from a casualty loss (see Part V, Chapter 5: Surveillance, Section 502.06F: Analysis of Collateral);
  • inspect 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). as frequently as necessary to ensure the BorrowerBorrowerPerson who is the obligor under the Note. is resolving outstanding deferred maintenance items; and
  • prior to ordering a PCAPCAAssessment of the current physical condition and historical operation of the Property.  (excluding regularly-scheduled PCAsPCAsAssessment of the current physical condition and historical operation of the Property. required by the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. ), submit a written request for approval to Multifamily WatchlistMultifamily WatchlistTeam that can be contacted at [email protected] .
502.03

Property Inspection Protocols

The frequency of required 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). inspections depends on the following:

  • 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. ’s Fannie Mae risk rating;
  • 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 at the Mortgage Loan Origination DateMortgage Loan Origination DateDate the Lender funds a Mortgage Loan to the Borrower. ; and
  • other criteria outlined in the table below.

PROPERTY INSPECTION PROTOCOL

Protocol if Original Mortgage Loan Amount is Greater than $30,000,000

Mortgage Loan Type

Fannie Mae Mortgage Loan Rating

Inspection Frequency

Min % of Total Units to be Inspected1

Min/Max

Number of Units to be Inspected2

Min

Required Photos

Third-Party or In-House Inspector

All Mortgage Loans, other than Seniors Housing Mortgage Loans and DUS Plus™

Pass or Special Mention

Annual Full Inspection

5%

5/15

15

Third-Party or In-House

 

Substandard or Doubtful

Annual Full Inspection

10%

10/20 15 In-House Only

Seniors Housing Mortgage Loans

Pass or Special Mention

Annual Full Inspection

5%

5/15

15

Third-Party or In-House

 

Substandard or Doubtful

Annual Full Inspection

10%

10/20

15

In-House Only

DUS Plus

All Ratings

Annual Full Inspection

10% (max of 20 units)

10/20

15

In-House Only

Protocol if Original Mortgage Loan Amount is Greater than $6,000,000 and up to $30,000,000

 

(NOTE:  When the inspection protocol below is based, in part, on the DSCR, the DSCR must be based on the most recent annual financial statement submitted to Fannie Mae.  A Property with a most recent inspection rating of 4 or 5 must have an Annual Full Inspection, regardless of the DSCR test outlined below.)

 

Mortgage Loan Type

Fannie Mae Mortgage Loan Rating

Inspection Frequency

Min % of Total Units to be Inspected1

Min/ Max

Number of Units to be Inspected2

Min

Required Photos

Third-Party or In-House Inspector

All Mortgage Loans other than Seniors Housing Mortgage Loans and DUS Plus

Pass or Special Mention;

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. > 1.35 or

CoopCoopMultifamily residential property owned by a Cooperative Organization. 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. > 1.00

Full Inspection every 2 years; Annual Full Inspection if current year 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. not available

5%

5/15

15

Third-Party or In-House

 

Pass or Special Mention; 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. < 1.35 or CoopCoopMultifamily residential property owned by a Cooperative Organization. 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. < 1.00

Annual Full Inspection

5%

5/15

15

Third-Party or In-House

 

Substandard or Doubtful

Annual Full Inspection

10%

10/20

15

In-House Only

Seniors Housing Mortgage Loans

Pass or Special Mention

Annual Full Inspection

5%

5/15

15

Third-Party or In-House

 

Substandard or Doubtful

Annual Full Inspection

10%

10/20

15

In-House Only

DUS Plus

All Ratings

Annual Full Inspection

10%

10/20

15

In-House Only

All Maturing Mortgage Loans

All Ratings

Full Inspection due within the 12 months prior to Maturity DateMaturity DateDate all amounts due and owing under the Mortgage Loan become fully due and payable per the Loan Documents. 1,2

Follow requirements for applicable 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. type.

Protocol if Original Mortgage Loan Amount is $6,000,000 or Less

Mortgage Loan Type

Fannie Mae Mortgage Loan Rating

Inspection Frequency

Min % of Total Units to be Inspected1

Min/Max

Number of Units to be Inspected2

Min

Required Photos

Third-Party or In-House Inspector

All Mortgage Loans other than Seniors Housing Mortgage Loans

Pass or Special Mention, and original 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 < $750,000

Walk Around every 5 years

N/A

N/A

10

Third-Party or In-House

 

Pass or Special Mention, and original 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 $750,000 to $3,000,000

Full Inspection every 2 years

5%

2/5

10

Third-Party or In-House

 

Pass or Special Mention, and original 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 <$3,000,001 and <$5,000,000 in Eligible MSAs

Full Inspection every 2 years

5%

2/5

10

Third-Party or In-House

 

Substandard or Doubtful, and original 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 < $3,000,001 ($5,000,000 in Eligible MSAs)

Annual Full Inspection

10%

2/5

10

In-House Only

Seniors Housing Mortgage Loans

Pass or Special Mention

Annual Full Inspection

5%

5/15

15

Third-Party or In-House

 

Substandard or Doubtful

Annual Full Inspection

10%

10/20

15

In-House Only

All Maturing Mortgage Loans

All Ratings

Full Inspection due within 12 months prior to Maturity DateMaturity DateDate all amounts due and owing under the Mortgage Loan become fully due and payable per the Loan Documents. 3

Follow requirements for applicable 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. type.

1 The number of units to be inspected based on the Minimum Percentage Requirement should not exceed the Maximum Number of Units.

 

2 For a Property with 10 units or less, the minimum number of units to be inspected is 2 units.  This minimum unit count is for occupied and vacant units.  If the Property contains any “down” units, then all “down” units must be inspected in addition to the occupied and vacant units.

 

3 If the next scheduled inspection due date for a Property is less than six months prior to the Maturity Date, then the next scheduled inspection due date shall be that date which is six months prior to the Maturity Date.

 

NOTE:  If a Property consists of Non-Contiguous Parcels or scattered sites:

 

  • all buildings on each separate parcel or site must be inspected;
  • the total required number of units based on the above protocol must be allocated among each parcel in approximately the same proportion as the number of units at each parcel to the total number of units at the Property; and
  • the units to be inspected at each parcel must be selected randomly, according to the above inspection protocol.
502.04

Property Inspection Frequency; Submission of Property Inspection Forms

502.04A

Timing of Property Inspections

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). inspections must be performed at the frequency per Part V, Chapter 5: Surveillance, Section 502.03: Property Inspection Protocols, and must be completed in sufficient time for 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). inspection form to be submitted by the “Submission Due Date”.

To facilitate more efficient scheduling of the physical inspections for PropertiesPropertiesMultifamily 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). , the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). may request an extension of up to 60 days from the “Submission Due Date”.  The extension request will be automatically approved so long as:

  • it is submitted prior to the original “Submission Due Date” by using the “Modification Request” tab within the particular work item in the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. ;
  • an extension was not already granted for the same 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). inspection requirement;
  • 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 not rated Substandard or Doubtful, nor has 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). condition rating of:
    • 4 or 5 on the most recent inspection; or
    • 3 on an inspection more than one year old; and
  • the extended “Submission Due Date” is not within the 6 months prior to the Maturity DateMaturity DateDate all amounts due and owing under the Mortgage Loan become fully due and payable per the Loan Documents. .
502.04B

Submission of Property Inspection Forms

All 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). inspection forms must be submitted to Fannie Mae through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. .  Origination inspections must be submitted within 45 days after the date 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. was purchased by Fannie Mae.  Thereafter, each required 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). inspection form must be submitted within 60 days after the date of the actual 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). inspection, and no later than the “Submission Due Date” shown in the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. , unless an extension was granted by Fannie Mae.  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must resolve any issues identified by Fannie Mae during its review 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). inspection reports in a timely manner.

502.05

Property Inspector Qualifications

502.05A

Minimum Inspector Experience

Inspections must be performed by either a qualified third party or ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). staff as specified in 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). Inspection Protocol table in Part V, Chapter 5: Surveillance, Section 502.03: Property Inspection Protocols.  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). is responsible for ensuring that the inspector has at least the minimum level of experience required to conduct a Fannie Mae inspection.  At a minimum, the inspector must have completed an acceptable “Property Inspection Risk Management” course or other acceptable training course, including the courses provided by the MBAMBAMortgage Bankers Association , and must have previous inspection experience as follows:

Mortgage Loan Rating Minimum Previous Inspection Experience
Pass and Special Mention Mortgage Loans (except Seniors Housing Mortgage Loans) 10 multifamily property inspections
Substandard and Doubtful Mortgage Loans (except Seniors Housing Mortgage Loans) 25 multifamily property inspections
Seniors Housing Mortgage Loans 10 Seniors HousingSeniors HousingMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. property inspections
502.05B

Third-Party Inspector Requirements

If 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). Inspection Protocol table in Part V, Chapter 5: Surveillance, Section 502.03: Property Inspection Protocols permits a third-party inspector, the third-party inspector cannot reassign responsibilities to another person or entity without the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). ’s approval.  Any third-party inspector must:

  • have no financial interest in 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). to be inspected;
  • demonstrate experience in multifamily real estate property inspections;
  • be experienced in the market in which 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). is located; and
  • either:
    • possess a professional certification from any one of the following:
      • Real Estate Assessment Center for HUDHUDU.S. Department of Housing and Urban Development as a Certified Home Inspector;
      • American Society of Home Inspectors ("ASHI");
      • International Association of Certified Home Inspectors ("InterNACHI"); or
      • State certified home inspector;
    • be a registered architect;
    • be a civil engineer; or
    • have successfully completed an acceptable in-person training course in lieu of the above.  (Note:  On-line attendance at such course is not acceptable.)  Acceptable training courses include the Fannie Mae approved inspection course provided by the MBAMBAMortgage Bankers Association .

Fannie Mae reserves the right, in its sole discretion, to notify the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). that a third-party inspection firm is no longer acceptable to Fannie Mae.

502.06

Content of Property Inspections

502.06A

Number of Units to be Inspected; “Down” Units

The requirements specified in 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). Inspection Protocol table in Part V, Chapter 5: Surveillance, Section 502.03: Property Inspection Protocols are minimum numbers of occupied and vacant units that must be inspected.  In addition to occupied and vacant units, all “down” units (i.e., units that are not rentable at the current time, or that cannot be rented in the normal course of business) must be inspected as part 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). inspection.  If 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). inspector notes substantial physical concerns that warrant further investigation, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must determine whether it is prudent to inspect additional units over and above the number of units required to be inspected.

502.06B

Selection of Units to be Inspected

The MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes.  will indicate, for each 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). , the number of units required to be inspected.  When units are required to be inspected, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must determine the appropriate combination of vacant and occupied units for inspection.  The units selected for inspection must meet the following requirements:

  • a minimum of 50% of all units inspected must be vacant units (if available);
  • at least 2 occupied units must be inspected; and
  • if selected, the interior of each unit must be inspected.

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). inspector, not 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). manager, must select which vacant and occupied units will be inspected.

502.06C

Photographs

The Property Inspection Protocol table in Part V, Chapter 5: Surveillance, Section 502.03: Property Inspection Protocols indicates, for each Asset ClassAsset ClassType of Multifamily Property securing a Mortgage Loan (e.g., conventional, Seniors Housing, Manufactured Housing Community, Cooperative, etc.). , the minimum number of photographs required to be submitted with 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). inspection form.  Such photographs must include views and identifying captions of:

  • signage;
  • typical building front;
  • site office and clubhouse (if applicable);
  • 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). frontage;
  • apartment interior;
  • amenities;
  • major building systems;
  • deferred maintenance and life safety items;
  • extraordinary repair items or items requiring capital expenditure; and
  • all critical or substantial issues noted in the inspection report.
502.06D

Consultation with Property Manager and Staff

For 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). inspections other than walk-around inspections, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must interview 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). manager and other on-site staff to obtain information regarding the Property'sProperty'sMultifamily 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). condition and performance, and to confirm that any life/safety repair and deferred maintenance items noted on the most recent 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). inspection have been corrected.

502.06E

Analysis of Market

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must evaluate the neighborhood, submarket, and market in which 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). is located to determine material shifts in demographics and real estate conditions.  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must also evaluate competitive properties to determine any changes in the competitive position 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). since the initial underwriting or the most recent 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). inspection.

502.06F

Analysis of Collateral

If the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). determines that repair or maintenance is required, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must notify the BorrowerBorrowerPerson who is the obligor under the Note. according to the notice provisions of the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. .  The notice must:

  • be sent within 45 days from the date of the actual inspection;
  • identify the repair or maintenance issues;
  • include any accompanying photos; and
  • direct the BorrowerBorrowerPerson who is the obligor under the Note. to undertake timely corrective actions to remedy the issues.

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must follow-up until the work has been successfully completed.  If the BorrowerBorrowerPerson who is the obligor under the Note. fails to perform all repairs or maintenance required by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). within a specified period of time, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must notify Multifamily InspectionsMultifamily InspectionsTeam that can be contacted at [email protected]  in writing with a recommendation for resolution.

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). inspection overall rating must be set to 4 (or 5 depending on severity or other existing issues), if:

  • a casualty loss causes damage in an amount equal to the lesser of (i) 25% of the current UPBUPBUnpaid Principal Balance , or (ii) $1,000,000; or
  • 10% or more of the units are down due to any reason.

Setting the rating to 4 (or 5, as applicable) will not automatically put 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. on Fannie Mae’s WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. , nor will it trigger the requirement (i) for an Action PlanAction PlanServicer’s report to Fannie Mae including detailed analysis of Mortgage Loan and Property issues, Servicer's strategy for resolving issues, and related actions and outcomes. ; or (ii) to reinstate the Replacement ReserveReplacement ReserveCustodial Account established by the Lender and funded by deposits from the Borrower over the term of the Mortgage Loan to fund the replacement of capital items at the Property. , as long as:

  • no other performance related issues otherwise increase the credit risk; and
  • the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). expects sufficient insurance proceeds will be available to restore 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). to its original condition.

If Fannie Mae determines that 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). inspection is inadequate, Fannie Mae reserves the right to require a new 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). inspection be performed by either the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). or a third party designated by Fannie Mae at the expense of the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). .

502.06G

Life Safety Issues

If the inspection is conducted by a third-party inspector and reveals any 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). life safety issues, the inspection firm must notify the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). of such issues within 3 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day on which Fannie Mae is closed, day on which the Federal Reserve Bank of New York is closed, or for any MBS and any required withdrawal for remittance thereunder, a day on which the Federal Reserve Bank is closed in the district where any… after completion of the inspection.

502.07

Servicer Property Inspection Quality Control Requirements

502.07A

Review of Inspection Forms

All 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). inspection forms, whether prepared by third parties or by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). , must be reviewed internally by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). prior to submission to Fannie Mae.

502.07B

Quality Control Program

ServicersServicersPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). are required to have a quality control program in place to annually review the quality 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). inspections performed by third-party inspectors.  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must be prepared to show the evidence and results of such quality control program to Fannie Mae upon request.

502.08

Retention of Inspection Forms

All 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). inspection forms must be maintained in the Servicing FileServicing FileFile for each Mortgage Loan serviced by the Lender. for at least 2 inspection cycles and made available for verification by Fannie Mae upon request.

502.09

Other Property Inspections; Inspection Fees

In addition to performing 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). inspections required in this Section, Fannie Mae, in its sole discretion, may require that the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). perform additional 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). inspections whenever circumstances warrant.  In addition, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). is expected to perform 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). inspections as part of its regular asset management responsibilities whenever the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). determines it prudent to do so.

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). may charge the BorrowerBorrowerPerson who is the obligor under the Note. a reasonable fee for performing 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). inspections provided that charging a fee:

  • is permitted under the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. or another written agreement with the BorrowerBorrowerPerson who is the obligor under the Note.; and
  • is not specifically precluded by Fannie Mae.
502.10

PCA Frequency

A new PCAPCAAssessment of the current physical condition and historical operation of the Property. is required during 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. term in the following circumstances:

If the Property...

A new PCA must be performed...

Secures a Mortgage Loan with a term of more than 10 years

every 10 years, beginning in the 10th Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. .

Is a Multifamily Affordable Housing property

every 5 years, beginning in the 5th Loan YearLoan YearPeriod beginning on the date of the Note and ending on the last day of the month that is 12 full months after the date of the Note, and each successive 12-month period thereafter. .

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). may use Streamlined PCA Guidance (Form 4099.A) if the most recent 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). site inspection:

  • was performed according to Part II, Chapter 4: Inspections and Reserves, Section 401: Site Inspection;
  • indicated an overall rating of 1 or 2; and
  • did not reveal any adverse change in 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). condition (except normal wear and tear) or life safety issues.
Section 503

Quarterly and Annual Financial Analysis of Operations

503.01

Electronic Reporting of Financial Analysis of Operations

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit quarterly and annual Financial Analysis of Operations reports (Form 4254) to Fannie Mae for each 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). in accordance with the requirements of this Section.  All reports are found on, and must be submitted electronically through, the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. .

503.02

Request for Waivers of Quarterly and Annual Reporting on Financial Analysis of Operations

503.02A

Waivers for Reasons Other Than Unresponsive Borrowers

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit a waiver through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. for each 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). if a Financial Analysis of Operations (Form 4254 or Form 4254.Seniors) is required by this Section, and:

  • 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. was purchased from a LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. whose Lender ContractLender ContractProgram Documents per the Mortgage Selling and Servicing Agreement. specifies that the collection of 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). operating statements for 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. is not required;
  • the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. either do not permit the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. to collect, or require the BorrowerBorrowerPerson who is the obligor under the Note. to submit, financial reports; or
  • 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. :
    • was liquidated in the current quarter (for waivers of quarterly reporting) or year (for waivers of annual reporting), prior to the Financial Analysis of Operations submission deadline;
    • was delivered under a Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property per Part XV of the DUS Guide, subject to certain conditions. and has not yet converted to a permanent loan;
    • was defeased;
    • is subject to FHAFHAFederal Housing Administration or HUDHUDU.S. Department of Housing and Urban Development risk sharing;
    • is being managed by Fannie Mae’s Special Asset ManagementSpecial Asset ManagementTeam that performs the work of the Special Servicer for Fannie Mae that can be contacted at [email protected] ; or
    • was acquired by Fannie Mae in the current reporting year and less than 6 months of operating data is available for 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). .
503.02B

Waivers due to Unresponsive Borrowers

If the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). is unable to submit an annual or quarterly Financial Analysis of Operations (Form 4254 or Form 4254.Seniors) report for 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). because the BorrowerBorrowerPerson who is the obligor under the Note. failed to provide the requested operating statements, before submitting a waiver request, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). should:

  • for the annual Financial Analysis of Operations, wait until 6 months have passed from the submission due date to submit a waiver request in the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. ; and
  • for a quarterly Financial Analysis of Operations, wait until the following quarterly submission due date to submit a waiver request in the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. .

Delaying the submission of the waiver request will provide additional time to obtain and submit the operating statement data, if received.  If the BorrowerBorrowerPerson who is the obligor under the Note. fails to respond to at least 3 written requests within the applicable waiting period specified above, the waiver request should then be submitted, with the following condition:

“Unresponsive Borrower - The Borrower was contacted in writing at least 3 times and failed to provide the requested operating statements.”

Fannie Mae will review the waiver requests, and will notify the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). if additional information is required.  If quarterly or annual operating statements are received after a waiver has been granted, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit the Financial Analysis of Operations report (Form 4254 or Form 4254.Seniors) upon receipt of such operating data.

503.03

Quarterly Reporting on Financial Analysis of Operations

503.03A

Quarterly Reporting Requirements

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit detailed quarterly operating statements for each 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). , normalized to account for any seasonal variations in income and expenses, in accordance with the requirements set forth for each Asset ClassAsset ClassType of Multifamily Property securing a Mortgage Loan (e.g., conventional, Seniors Housing, Manufactured Housing Community, Cooperative, etc.). in the tables below.  The reports must be submitted through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. .  All submitted operating statements will undergo automated quality control testing, and any quality control issues identified must be resolved timely.

The quarterly operating statements must reflect the actual physical occupancy level for 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). as of the end of each quarter, based on the most recently available rent roll.  When quarterly reports are required, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must provide actual expenses, and must normalize certain expense items, including, but not limited to, real estate taxes, casualty insurance, Replacement ReservesReplacement ReservesCustodial Account established by the Lender and funded by deposits from the Borrower over the term of the Mortgage Loan to fund the replacement of capital items at the Property. and management fees, consistent with the guidance provided in the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. for submitting annual financial statements.  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must explain any seasonal data discrepancies, and provide comments if any of the following are observed:

  • a variance of greater than 20% from the same reporting period in the prior year of any of Effective Gross IncomeEffective Gross IncomeOn an annual basis or any specified period, the total of Net Rental Income plus other income per Part II: Property, Section 202 and the applicable products and features in Part III. , total operating expenses, Gross Potential RentGross Potential RentOn an annual basis or any specified period, the total actual and potential rent for a Property (per Part II: Property, Section 202 and the applicable products and features in Part III). , Private Pay, Medicare/Medicaid, Repairs and Maintenance, Utilities, Water and Sewer, Real Estate Taxes and Property Insurance;
  • a variance in physical occupancy of greater than 10% from the immediately preceding reporting period;
  • a change in 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 tax-exempt status (if applicable);
  • a change in the required P&IP&IPrincipal and interest payments during a reporting period (e.g., interest-only to amortizing);
  • management fees of less than 3%;
  • a change in any other pertinent information related 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). financial analysis; or
  • 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 on the Fannie Mae WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. .

Quarterly financial reporting is not required, and no waiver need be submitted, for 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. if it is secured by a Cooperative PropertyCooperative PropertyMultifamily residential property owned by a Cooperative Organization. , or it is a Small Mortgage LoanSmall Mortgage LoanMortgage Loan with an original loan amount less than or equal to $6 million and underwritten per Part III: Products and Features, Chapter 9. , unless such Cooperative PropertyCooperative PropertyMultifamily residential property owned by a Cooperative Organization. or Small Mortgage LoanSmall Mortgage LoanMortgage Loan with an original loan amount less than or equal to $6 million and underwritten per Part III: Products and Features, Chapter 9. is on the Fannie Mae WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. .

503.03B

Quarterly Submission Requirements by Asset Class

1.  All Asset Classes (except Seniors HousingSeniors HousingMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. PropertiesPropertiesMultifamily 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). , WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. PropertiesPropertiesMultifamily 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). , Credit FacilitiesCredit FacilitiesStructured Transaction that is governed by a Master Credit Facility Agreement, and includes cross-collateralized and cross-defaulted Mortgage Loans and Properties. , and Bulk DeliveriesBulk DeliveriesStructured Transaction that: is governed by a Bulk Delivery Agreement; and includes the ability to add Mortgage Loans in the future, or substitute a new Property for an existing Property as collateral. ).  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit detailed quarterly operating statements 75 days after the end of the second and third quarters, as set forth below.

All Asset Classes except Seniors Housing,

Watchlist Properties, Credit Facilities, and Bulk Deliveries

 

 

Required Information

Quarter

Due Date*

Property with a 12/31 Fiscal Year End Property with other than a 12/31 Fiscal Year End

Second

September 15

Financial operating statements for the period from January 1 through June 30

6 months year to date operating data

Third

December 15

Financial operating statements for the period from January 1 through September 30

9 months year to date operating data

*If any due date is not a Business Day, then the submission may be made on the next Business Day.

2.  Seniors Housing Properties.  For Seniors HousingSeniors HousingMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. PropertiesPropertiesMultifamily 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). , the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit detailed quarterly operating statements 75 days after the end of the first, second, third and fourth quarters, as set forth below.

Seniors Housing Properties

 

 

Required Information

Quarter

Due Date*

Property with a 12/31 Fiscal Year End Property with other than a 12/31 Fiscal Year End

First

June 15

Financial operating statements for the period from January 1 through March 31

Trailing 3 months operating data

Second

September 15

Financial operating statements for the period from April 1 through June 30

Trailing 3 months operating data

Third

December 15

Financial operating statements for the period from July 1 through September 30

Trailing 3 months operating data

Fourth

March 15

Financial operating statements for the period from October 1 through December 31

Trailing 3 months operating data

*If any due date is not a Business Day, then the submission may be made on the next Business Day.

3. Watchlist Properties.  For WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. PropertiesPropertiesMultifamily 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). (including 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 Cooperative PropertyCooperative PropertyMultifamily residential property owned by a Cooperative Organization. or any Small Mortgage LoansSmall Mortgage LoansMortgage Loan with an original loan amount less than or equal to $6 million and underwritten per Part III: Products and Features, Chapter 9. ), the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit detailed quarterly operating statements 90 days after the end of the first quarter, and 75 days after the end of the second and third quarters, as set forth below.

Watchlist Properties

 

 

Required Information

Quarter

Due Date*

Property with a 12/31 Fiscal Year End Property with other than a 12/31 Fiscal Year End

First

June 30

Financial operating statements for the period from January 1 through March 31

3 months year-to-date operating data

Second

September 15

Financial operating statements for the period from January 1 through June 30

6 months year-to-date operating data

Third

December 15

Financial operating statements for the period from January 1 through September 30

9 months year-to-date operating data

*If any due date is not a Business Day, then the submission may be made on the next Business Day.

4. Credit Facilities and Bulk Deliveries.  For Credit FacilitiesCredit FacilitiesStructured Transaction that is governed by a Master Credit Facility Agreement, and includes cross-collateralized and cross-defaulted Mortgage Loans and Properties. and Bulk DeliveriesBulk DeliveriesStructured Transaction that: is governed by a Bulk Delivery Agreement; and includes the ability to add Mortgage Loans in the future, or substitute a new Property for an existing Property as collateral. , the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit both the detailed quarterly operating statements and the Deal Level Structured Transaction (BD/CF) Quarterly report, including the Structured Facilities Monitoring Narrative (Form 4801), Spreadsheet (Form 4802), and any other relevant documents, 75 days after the end of the first, second, third, and fourth quarters, as set forth below.

Credit Facility and Bulk Delivery Properties

 

 

Required Information

Quarter

Due Date*

Property with a 12/31 Fiscal Year End Property with other than a 12/31 Fiscal Year End

First

June 15

Financial operating statements for the period from January 1 through March 31, and deal level reports

Trailing 3 months operating data

Second

September 15

Financial operating statements for the period from April 1 through June 30, and deal level reports

Trailing 3 months operating data

Third

December 15

Financial operating statements for the period from July 1 through September 30, and deal level reports

Trailing 3 months operating data

Fourth

March 15

Financial operating statements for the period from October 1 through December 31, and deal level reports

Trailing 3 months operating data

*If any due date is not a Business Day, then the submission may be made on the next Business Day.

503.04

Annual Reporting on Financial Analysis of Operations

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit a Financial Analysis of Operations (Form 4254 or Form 4254.Seniors) annually to Fannie Mae for each 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). for the previous calendar year or, if applicable, for the fiscal year ending in the previous calendar year.

503.04A

Annual Financial Analysis Reporting Requirements

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit detailed operating statements for each 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). , normalized to account for any seasonal variations in income and expense.  The annual operating statements must reflect the actual physical occupancy rate for 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). as of the end of the reporting period, based on the most recent available rent roll.  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must provide actual expenses and must also normalize certain expense items, including, but not limited to, real estate taxes, property casualty insurance, Replacement ReservesReplacement ReservesCustodial Account established by the Lender and funded by deposits from the Borrower over the term of the Mortgage Loan to fund the replacement of capital items at the Property. , and property management fees.  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must provide comments if any of the following are observed:

  • a variance of greater than 20% from the prior year of any of Effective Gross IncomeEffective Gross IncomeOn an annual basis or any specified period, the total of Net Rental Income plus other income per Part II: Property, Section 202 and the applicable products and features in Part III. , total operating expenses, Gross Potential RentGross Potential RentOn an annual basis or any specified period, the total actual and potential rent for a Property (per Part II: Property, Section 202 and the applicable products and features in Part III). , Private Pay, Medicare/Medicaid, Repairs and Maintenance, Utilities, Water and Sewer, Real Estate Taxes and Property Insurance;
  • a variance in physical occupancy of greater than 10% from the reporting period immediately preceding the current reporting period;
  • a change in 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 tax-exempt status (if applicable) during the year;
  • a change in the required P&IP&IPrincipal and interest  payments during the year (e.g., interest-only to amortizing);
  • management fees of less than 3%;
  • a change in any other pertinent information related 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). financial analysis; or
  • 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 on the Fannie Mae WatchlistWatchlistMortgage Loan or Property exhibiting heightened credit risk as identified by the Lender or Fannie Mae. .
503.04B

Submitting the Annual Financial Analysis of Operations

The following steps must be taken to complete and submit the annual Financial Analysis of Operations report (Form 4254 or Form 4254.Seniors) to Fannie Mae:

1.  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. purchased by Fannie Mae on or before June 30 in any given year, the Annual Financial Analysis of Operations (Form 4254 or Form 4254.Seniors) covering that first year must be submitted to Fannie Mae by June 1 of the following year, and the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must annualize the available operating data to represent a full 12 months of operations.  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. was purchased by Fannie Mae on or after July 1 in any given year, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). is not required to submit an annual Financial Analysis of Operations (Form 4254 or Form 4254.Seniors) until June 1 of the second year after purchase in order to collect 12 months of actual operating data.

For all subsequent years, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit an annual operating statement for each 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 Fannie Mae on or before June 1 or, if applicable, within 150 days following the fiscal year-end for any 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). owned by a BorrowerBorrowerPerson who is the obligor under the Note. with a non-calendar fiscal year.  For any BorrowerBorrowerPerson who is the obligor under the Note. with a non-calendar fiscal year, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit a data change request through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. requesting a change to the BorrowerBorrowerPerson who is the obligor under the Note.’s fiscal year end.

2  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must analyze the operating statements submitted by the BorrowerBorrowerPerson who is the obligor under the Note. in accordance with the Multifamily Analysis of Operations Form 4254 and Form 4254.Senors Line Item Definitions (Form 4254.DEF), which is located at www.fanniemae.com/multifamily or the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. .  The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must indicate on the Borrower'sBorrower'sPerson who is the obligor under the Note. operating statements the line item under which each of the Borrower'sBorrower'sPerson who is the obligor under the Note. income and expense line items is included.

3.  For each 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). , the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must access the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. and provide the pertinent income, expense, and other required data for the current reporting period.  All submitted operating statements will undergo automated quality control testing, and any issues must be resolved timely.

503.04C

Annual Review

Fannie Mae will notify the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). which 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. are subject to the annual review.  Within 15 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day on which Fannie Mae is closed, day on which the Federal Reserve Bank of New York is closed, or for any MBS and any required withdrawal for remittance thereunder, a day on which the Federal Reserve Bank is closed in the district where any… after receiving notice, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. for each 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. under review:

  • the BorrowerBorrowerPerson who is the obligor under the Note.’s operating statements, with each income and expense line item coded by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). according to the line item definitions in the Multifamily Analysis of Operations Form 4254 and Form 4254.Seniors Line Item Definitions (Form 4254.DEF);
  • an escrow activity reconciliation of the BorrowerBorrowerPerson who is the obligor under the Note.’s operating statement data; and
  • any other documentation requested by Fannie Mae.
503.04D

Asset Management Testing

The Multifamily Asset ManagementMultifamily Asset ManagementTeam that can be contacted at [email protected] team tests compliance with many areas of the Asset Management process to ensure ServicersServicersPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). are properly adhering to Fannie Mae’s requirements.  Testing results are communicated through the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. Assessment process, and recommendations, requirements for corrective action, or best practice enhancements are proposed and monitored through completion.

503.04E

Maintenance of Records

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must maintain the BorrowerBorrowerPerson who is the obligor under the Note.’s operating statements and reconciliation for the life 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. .

Section 504

Compliance with Loan Agreement Requirements

504.01

General

The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must ensure that the BorrowerBorrowerPerson who is the obligor under the Note. and any guarantor are in compliance with the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. .  For all 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. , the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must:

  • confirm that the BorrowerBorrowerPerson who is the obligor under the Note. complied with all quarterly and annual reporting requirements, which are primarily set out in Article 8 of the Multifamily Loan Agreement (Form 6001 series); and
  • review all information required by the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. to be furnished by the BorrowerBorrowerPerson who is the obligor under the Note..

To assist in compiling the financial records and other items required to be furnished by the BorrowerBorrowerPerson who is the obligor under the Note., the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). may use the Annual Loan Agreement Certification (Form 6620 series).

504.02

Obtaining Required Financial and other Reporting Items

504.02A

Notice to the Borrower

At the end of each fiscal year, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must send the BorrowerBorrowerPerson who is the obligor under the Note., and all guarantors on 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. , a list of the financial reports required to be submitted and certified by each BorrowerBorrowerPerson who is the obligor under the Note. and guarantor.  The list must be delivered in sufficient time to allow submission to the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). of the certified financial reports within 45 days after the end of each fiscal quarter, and 120 days after the end of each fiscal year.

504.02B

Annual Reporting of Guarantor Financial Condition

Fannie Mae will provide the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). with an annual list of all 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. for which the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit the financial records and other required items for the past fiscal year by, or on behalf of, each guarantor 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. .  The guarantor financial information must be submitted through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. , or as otherwise directed by Fannie Mae, by the June 1 deadline required for the annual Financial Analysis of Operations reports (Form 4254) for each 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). .  If Fannie Mae determines increased credit risk 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. not on the initial list provided to the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). , Fannie Mae may ask for the submission of the associated guarantor financial records at any other time during the year.

504.02C

Failure of Borrower to Provide Required Guarantor Financial Reporting

The LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. must use its best efforts to obtain the required financial reports for any guarantor not included on Fannie Mae’s list of 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. for which the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must submit the financial records of each guarantor 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. .

For all 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. included on Fannie Mae’s list, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must contact Fannie Mae immediately upon the occurrence of any of the following events:

  • the BorrowerBorrowerPerson who is the obligor under the Note. is unable to submit the required guarantor financial reports and other items by the date required in the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. ;
  • the BorrowerBorrowerPerson who is the obligor under the Note. or guarantor is unable to certify that each financial report is true, complete, and accurate in all material respects; or
  • the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). believes the financial reports and other items are, inaccurate or misleading in any material way.

Upon the occurrence of any of the foregoing events, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must notify the BorrowerBorrowerPerson who is the obligor under the Note., and the BorrowerBorrowerPerson who is the obligor under the Note. or guarantor shall have an additional 30 days after receipt of such written notice to deliver to the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). all required financial reports and other items, properly certified by the BorrowerBorrowerPerson who is the obligor under the Note. or guarantor.  If the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). determines that the BorrowerBorrowerPerson who is the obligor under the Note. or guarantor is diligently attempting to deliver all required financial reports and other items, this 30 day period may be extended by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). for up to an additional 30 days.

If the BorrowerBorrowerPerson who is the obligor under the Note. or a guarantor fails to (i) submit all required financial reports and other items, properly certified by the BorrowerBorrowerPerson who is the obligor under the Note. or guarantor, within the above time frame; or (ii) respond to at least 3 written requests for the delivery of the required information, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must request a waiver through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, and requested modifications; asset management reports; and data corrections related to loan or property level attributes. for the BorrowerBorrowerPerson who is the obligor under the Note., or Multifamily Operating StatementsMultifamily Operating StatementsTeam that can be contacted at [email protected]  for the guarantor.  The ServicerServicer