408.04J

Processing Borrower Requisitions

1.  General

The Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. specify the frequency, timing, and size of disbursements from the Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. .

2.  Required Documentation

Each BorrowerBorrowerPerson who is the obligor per the Note. requisition must be in writing and specify, at a minimum:

  • the specific capital item replaced or major maintenance items for which reimbursement is being sought, and if any item is not specifically identified in the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , an explanation of why the Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. funds should be released for the item;
  • the quantity and price of each type of capital item replaced (e.g., refrigerators);
  • the quantity and price of all materials or parts (grouped by type or category) purchased; and
  • the cost of all contracted labor or other services.

Each BorrowerBorrowerPerson who is the obligor per the Note. requisition submitted to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must be accompanied by:

  • a BorrowerBorrowerPerson who is the obligor per the Note. certification that the capital item replacements or major maintenance items covered by the requisition have been completed in compliance with all applicable laws, ordinances, rules, and regulations of any governmental authority, agency, or instrumentality having jurisdiction over the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ; and
  • if the invoice exceeds the lesser of $25,000 or 1% of the UPBUPBUnpaid Principal Balance :
    • a copy of the invoice detailing the covered materials, labor, or services;
    • payment evidence; 
    • a LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. release from each contractor, subcontractor, or materialman; and
    • other relevant documentation required by the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .

3.  Disbursement of Funds

The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may release funds to the BorrowerBorrowerPerson who is the obligor per the Note. only if all required documentation is received, and all applicable release conditions have been met, including, but not limited to:

  • all capital item replacements or major maintenance items covered by the requisition have been completed in a good and workmanlike manner;
  • all related invoices for capital items and services have been paid, unless the BorrowerBorrowerPerson who is the obligor per the Note. has satisfied any applicable conditions of the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan.  for issuance of a joint check, made payable to the BorrowerBorrowerPerson who is the obligor per 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;
  • 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. are outstanding that have not been acceptably bonded over; and
  • the BorrowerBorrowerPerson who is the obligor per the Note. is not in default under any Loan DocumentLoan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .

The amount disbursed to the BorrowerBorrowerPerson who is the obligor per the Note. must not exceed the actual cost of the capital item replacements or major maintenance items covered by the Borrower’sBorrower’sPerson who is the obligor per the Note. requisition.

4.  Maintenance of Servicing File

The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must ensure that the action taken with respect to each BorrowerBorrowerPerson who is the obligor per the Note. requisition for funds from the Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. is appropriately documented in its Servicing FileServicing FileYour file for each Mortgage Loan serviced. .