408.03
| 408.03A | |
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The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must administer the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… to ensure the timely implementation of all Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable)..
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). is delegated the authority to extend the time limits for making Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). if:
- the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). subject to the extension request do not involve life safety issues; 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. does not have a Fannie Mae risk rating of Substandard or Doubtful.
Notwithstanding the above, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). is delegated the authority to grant a one-time extension of 30 days for a life safety issue if the BorrowerBorrowerPerson who is the obligor under the Note. is diligently pursuing completion of the related Completion/RepairCompletion/RepairImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable)..
The duration of any permitted non-life safety extension may not exceed:
- 1 year past the completion date specified in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… for that Completion/RepairCompletion/RepairImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable)., 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. with no Loss Sharing; and
- 2 years past the completion date specified in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… for that Completion/RepairCompletion/RepairImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable)., 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. with Loss Sharing.
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). is not delegated the authority to extend the time limit for any Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). that are Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. which the BorrowerBorrowerPerson who is the obligor under the Note. agreed to implement in order to qualify as a Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. or a Green Preservation Plus Mortgage Loan. Fannie Mae will generally not approve any waiver request to extend the time limit for implementing an Efficiency MeasureEfficiency MeasureEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption..
ServicersServicersPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). are delegated the authority to move required Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). from the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… to the Replacement Reserve ScheduleReplacement Reserve ScheduleThe Required Replacement Schedule to the Multifamily Loan Agreement (Form 6001 series) a Replacement Reserve and Security Agreement (Form 4506), or another agreement approved by Fannie Mae, that evidences: the Borrower’s agreement to undertake identified replacement of capital items and…, and the associated deposit from 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. into 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., provided:
- the Completion/RepairCompletion/RepairImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). does not involve life safety issues;
- delaying the Completion/RepairCompletion/RepairImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). will not materially negatively impact 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
- the total amount of Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). being transferred does not exceed the lesser of (i) 25% of the original Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). total, or (ii) $75,000.
Notwithstanding the above, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). is not delegated the authority to move required Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). to the Replacement Reserve ScheduleReplacement Reserve ScheduleThe Required Replacement Schedule to the Multifamily Loan Agreement (Form 6001 series) a Replacement Reserve and Security Agreement (Form 4506), or another agreement approved by Fannie Mae, that evidences: the Borrower’s agreement to undertake identified replacement of capital items and… for any Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. that the BorrowerBorrowerPerson who is the obligor under the Note. agreed to implement in order to qualify as a Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403. or a Green Preservation Plus Mortgage Loan.
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must submit the amended Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… 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., and retain a copy in its Servicing FileServicing FileFile for each Mortgage Loan serviced by the Lender..
For any Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the…, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must:
- retain a copy of the executed Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… in its Servicing FileServicing FileFile for each Mortgage Loan serviced by the Lender.;
- hold all 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. funds in an account that meets the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. requirements of Part V, Chapter 3: Custodial Account Requirements;
- ensure that all necessary permits are obtained, and that all required work is satisfactorily completed in a good and workmanlike manner by the completion dates stipulated in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the…;
- process BorrowerBorrowerPerson who is the obligor under the Note. requisitions for funds in accordance with the terms and conditions of the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the…;
- perform required inspections of completed work and, if appropriate, work in progress and, if necessary, arrange inspections by qualified professionals;
- ensure that the work done under the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… does not result in any mechanics’ LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind., materialmen’s LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind., or other LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. that have not been acceptably bonded over;
- promptly notify Fannie Mae of any default under the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… in accordance with the requirements of Part V, Chapter 7: Non-Performing Mortgage Loans;
- take appropriate steps to remedy or address any default under the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the…; and
- perform all other administrative duties required by the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the….
| 408.03E | |
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1. General
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. funds are available to reimburse the BorrowerBorrowerPerson who is the obligor under the Note. for costs incurred for Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). that are specifically identified in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the…. The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). may authorize the release of funds to cover the costs of other reasonable and necessary repairs, replacements, or improvements that are not specified in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… only if the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… provides for such disbursements, and all conditions are fully satisfied.
2. Required Documentation for Disbursement
To obtain reimbursement, the BorrowerBorrowerPerson who is the obligor under the Note. must submit a written requisition specifying the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). for which reimbursement is being sought, including:
- the specific Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). completed;
- the quantity and price of all materials (grouped by type or category) or specific replacement items (e.g., appliances) purchased in connection with the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable).; and
- the cost of all contracted labor or other services involved in completing the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable)..
The BorrowerBorrowerPerson who is the obligor under the Note. requisition for the specified Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). for which reimbursement is being sought must be accompanied by:
- a BorrowerBorrowerPerson who is the obligor under the Note. certification that the specific Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). have been completed:
- in a good and workmanlike manner;
- in accordance with any plans and specifications previously approved by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer).; and
- in compliance with all applicable laws, ordinances, rules, and regulations of any governmental authority, agency, or instrumentality having jurisdiction over 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).;
- copies of invoices and evidence of payment for all items and materials purchased and all labor and services provided, the cost of which exceeds the lesser of $25,000 or 1% of the UPBUPBUnpaid Principal Balance; and
- a release of LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. from each contractor, subcontractor, or materialman providing services or materials, the cost of which exceeds the lesser of $25,000 or 1% of the UPBUPBUnpaid Principal Balance.
3. Disbursement of Funds (Excluding Final Disbursement)
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). may disburse funds to the BorrowerBorrowerPerson who is the obligor under the Note. only if it has received all required documentation and determined that all applicable conditions for disbursement have been met, including (but not limited to) the following:
- all Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). covered by the requisition have been completed in a good and workmanlike manner, as evidenced by the BorrowerBorrowerPerson who is the obligor under the Note.’s submission and, if appropriate, an inspection of the completed work (see guidance on inspections below);
- all related invoices for items and services covered by the requisition have been paid, unless the BorrowerBorrowerPerson who is the obligor under the Note. has satisfied any applicable pre-conditions of the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… for issuance of a joint check(s), made payable to the BorrowerBorrowerPerson who is the obligor under the Note. and the PersonPersonLegal person, including an individual, estate, trust, corporation, partnership, limited liability company, financial institution, joint venture, association, or other organization or entity (whether governmental or private). owed funds under such invoices;
- no mechanics’ LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind., materialmen’s LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind., or other LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. exist, unless acceptably bonded over; and
- no default exists under any Loan DocumentLoan DocumentAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae., including the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the….
The amount disbursed to the BorrowerBorrowerPerson who is the obligor under the Note. for any requisition, other than the final requisition, may not exceed the actual cost of the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable)., and may be less than the actual cost if, after disbursement, the amount of funds remaining in 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. would be less than the anticipated cost of completing all remaining Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). plus any holdback specified in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the….
Notwithstanding the above, once 75% of the total dollar amount of Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). is disbursed, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). may release funds in 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., provided:
- funds are only released for Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). that have been fully completed;
- the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). has complied with all other disbursement requirements;
- the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). completes an analysis showing that the remaining amount in 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. is sufficient to complete all remaining Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable).;
- the BorrowerBorrowerPerson who is the obligor under the Note. affirms in writing its obligation to complete the remaining Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). by the required completion dates; and
- the Completion/RepairCompletion/RepairImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). is not an Efficiency MeasureEfficiency MeasureEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption. the BorrowerBorrowerPerson who is the obligor under the Note. agreed to implement in order to qualify as a Green Rewards Mortgage LoanGreen Rewards Mortgage LoanMortgage Loan secured by a Property on which the Borrower agrees to undertake 1 or more Energy- and Water-Efficiency Measures (Efficiency Measures or EWEM) that comply with Part III: Products and Features, Section 403., as the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). is not delegated the authority to release any 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. related to any Efficiency MeasuresEfficiency MeasuresEnergy- and water-efficiency measures that the Borrower agrees to implement, and which project a reduction in the Property’s annual energy or water consumption..
4. Final Disbursement of Funds
Before making the final disbursement of funds from 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., the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must confirm and document the absence of any mechanics’ and materialmen’s LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. by requiring the BorrowerBorrowerPerson who is the obligor under the Note. to obtain an updated title report or a title policy endorsement showing that no such LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. exist. The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). may waive the updated title report or endorsement for Secondary Risk Mortgage LoansSecondary Risk Mortgage LoansMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted. when the total scope of work is less than $75,000. If the BorrowerBorrowerPerson who is the obligor under the Note. fails to provide the required title documentation, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must obtain a title report or title policy endorsement, and may charge the BorrowerBorrowerPerson who is the obligor under the Note. for the cost.
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). may make a final disbursement of all remaining funds upon satisfactory completion of all required Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable)., and satisfaction of all other applicable release conditions contained in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the….
5. Maintenance of Servicing File
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must document the action taken with respect to each BorrowerBorrowerPerson who is the obligor under the Note. requisition for funds from 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. in its Servicing FileServicing FileFile for each Mortgage Loan serviced by the Lender..
| 408.03F | |
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1. Use of Third Party
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). may 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)., or have a qualified independent third party 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)., to confirm that the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). covered by the requisition have been satisfactorily completed. The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). is responsible for monitoring the third-party’s performance.
2. When Periodic Inspections Are Required
Periodic inspections must be performed as the work progresses if the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable).:
- exceed in the aggregate the lesser of:
- $500,000, or 20% of the UPBUPBUnpaid Principal Balance of a Secondary Risk Mortgage LoanSecondary Risk Mortgage LoanMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted.; or
- $250,000, or 10% of the UPBUPBUnpaid Principal Balance of a Primary Risk Mortgage LoanPrimary Risk Mortgage LoanMortgage Loan where Fannie Mae bears all losses or where the Lender and Fannie Mae share losses.; and
- are likely to require more than 6 months to complete.
Inspections must occur at least every 3 months, or more frequently at the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer).’s discretion.
3. When a Final Inspection Is Required
An inspection must be performed to ensure that all Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). have been satisfactorily completed before approving and disbursing the final requisition when the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). exceed the lesser of:
- $500,000, or 20% of the UPBUPBUnpaid Principal Balance of a Secondary Risk Mortgage LoanSecondary Risk Mortgage LoanMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted.; or
- $250,000, or 10% of the UPBUPBUnpaid Principal Balance of a Primary Risk Mortgage LoanPrimary Risk Mortgage LoanMortgage Loan where Fannie Mae bears all losses or where the Lender and Fannie Mae share losses..
4. Confirming Completion/Repairs if Inspection Is Not Required
Even if an inspection is not required by this Section, the BorrowerBorrowerPerson who is the obligor under the Note. must provide evidence to the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). that all Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). covered by the requisition have been satisfactorily completed. If not inspected sooner, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must confirm the satisfactory completion of the Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Agreement (or a Certificate of Borrower, if applicable). during the next regularly scheduled 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.
5. Documenting the Servicing File
In all instances, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must document in its Servicing FileServicing FileFile for each Mortgage Loan serviced by the Lender. whether all work was satisfactorily completed.
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Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… funds may not be used to cover any administrative or inspection fees due to the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). unless expressly permitted in the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the…, or the BorrowerBorrowerPerson who is the obligor under the Note. agrees in writing. If permitted, 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. and deduct the following from any disbursement of funds:
- reasonable fees to cover the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer).’s costs of administering the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the…; and
- additional fees to cover any reasonable inspection costs that are not adequately covered by general administrative fees collected from the BorrowerBorrowerPerson who is the obligor under the Note..
1. Notification of Default to Fannie Mae
The ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must immediately notify Fannie Mae of any default under the Completion/Repair AgreementCompletion/Repair AgreementDocument evidencing the Borrower’s agreement to undertake Completion/Repairs and other identified capital improvements, the terms for funding the repairs, maintenance, or capital items, and the disbursement of funds from the Completion/Repair Escrow (e.g., Form 4505, or the applicable parts of the… in accordance with the requirements of Part V, Chapter 7: Non-Performing Mortgage Loans.
2. No Release of Funds to Borrower
No funds may be released to the BorrowerBorrowerPerson who is the obligor under the Note. while the BorrowerBorrowerPerson who is the obligor under the Note. is in default under any of the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae..