408.03F

Inspections

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.