Section 414
| 414.01 | |
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In the event of a casualty loss of $75,000 or more, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must submit through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. a:
- Report of Multifamily Hazard Insurance Loss (Form 178):
- within 30 days if no serious injury or death occurred; or
- within 10 days if serious injury or death occurred; and
- final Form 178 indicating that the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is fully restored, and document its Servicing FileServicing FileYour file for each Mortgage Loan serviced. when the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is fully restored.
A revised Form 178 must be submitted if any of the information on the form changes for any casualty loss greater than the lesser of (i) $500,000, or (ii) 20% of the UPBUPBUnpaid Principal Balance .
| 414.02 | |
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For any casualty loss covered by the Borrower’sBorrower’sPerson who is the obligor per the Note. insurance policy, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must ensure that the BorrowerBorrowerPerson who is the obligor per the Note. timely files a proof of loss with the insurance carrier, and effects a prompt and reasonable adjustment of the loss. If the BorrowerBorrowerPerson who is the obligor per the Note. fails to timely file a proof of loss with the insurance carrier, or take requisite actions to effect a prompt adjustment of the loss claim, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must independently contact the insurance carrier to adjust the loss claim.
| 414.03 | |
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The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must assess the extent and impact of any damage caused by a casualty, and ensure that the BorrowerBorrowerPerson who is the obligor per the Note. appropriately addresses the damage.
Within 45 days after learning of a casualty loss, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must document its Servicing FileServicing FileYour file for each Mortgage Loan serviced. with the results of its casualty loss assessment. At a minimum, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must include:
- when the casualty loss occurred and when the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. was first informed of the casualty loss;
- the scope of the damage and its effect on 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). (e.g., impact on the habitability of the buildings, safety of the residents, serious injury or loss of life, project occupancy, and project income and expenses);
- the Borrower’sBorrower’sPerson who is the obligor per the Note. plan of action for securing and restoring the damaged portion of 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 the status of the Borrower’sBorrower’sPerson who is the obligor per the Note. efforts to implement the plan, including the specific steps to be taken (e.g., temporarily relocating tenants, preparing plans and specifications, awarding contracts, and commencing repair work);
- whether any environmental problems are associated with the damage, and if so, how they will be addressed;
- the projected cost to repair and restore the damaged ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). , including any available information on contractors’ bids or awards;
- whether the casualty loss is covered by the Borrower’sBorrower’sPerson who is the obligor per the Note. insurance policy, the status of any insurance claim, and an estimate of the amount and timing of the funds to be received from the insurance carrier;
- the estimated amount of additional funds that the BorrowerBorrowerPerson who is the obligor per the Note. will have to provide from its own resources to complete all necessary repair and restoration work, and the current availability of such funds; and
- any other relevant information pertaining to the loss event that is known to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. and could have a material bearing on Fannie Mae’s interests.
The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must inspect 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). , take photographs of the damage, and complete a Multifamily Catastrophic Loss Inspection (Form 4261) if:
- the casualty loss is expected to exceed the lesser of (i) $500,000, or (ii) 20% of the UPBUPBUnpaid Principal Balance 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. as of the date of the casualty; or
- any of the following conditions exists:
- a default has occurred and is continuing under the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ;
- the combination of insurance proceeds and BorrowerBorrowerPerson who is the obligor per the Note. funds is insufficient to complete the necessary PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). repairs for restoration to a condition fit for human habitation and meeting all applicable permitting requirements;
- prior to the commencement of any restoration work, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. determines that, upon completion of the repair and restoration work, 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). will not be capable of generating sufficient income to cover all operating expenses, required Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. deposits, P&IP&IPrincipal and interest on 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. , and required payments on any subordinate debt secured by 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). , or will not otherwise meet a 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. or other test required by the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; or
- the repair and restoration work will not be completed by the earlier of (i) the Maturity DateMaturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. , or (ii) within 1 year from the date of the casualty.
The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may charge the BorrowerBorrowerPerson who is the obligor per the Note. for the cost of the inspection unless expressly prohibited by the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .
An inspection by the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is optional if the casualty loss is expected to be less than (i) $500,000, or (ii) 20% of the UPBUPBUnpaid Principal Balance , and none of the above conditions exist. If the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. elects not to inspect 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). , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must confirm during the next PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). inspection, and document in its Servicing FileServicing FileYour file for each Mortgage Loan serviced. , that the repair and restoration work was satisfactorily completed. If the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. determines that the repair or restoration work was not satisfactorily completed, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must notify Multifamily InspectionsMultifamily InspectionsTeam that can be contacted at [email protected]. and Multifamily Loss MitigationMultifamily Loss MitigationTeam that can be contacted at [email protected]. ) in writing, as required by Part V, Chapter 5: Surveillance.
After inspecting 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). , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must:
- retain in its Servicing FileServicing FileYour file for each Mortgage Loan serviced. a copy of the completed Catastrophic Loss Inspection (Form 4261), and photographs of the damaged portions of 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
- submit a copy of the Catastrophic Loss Inspection (Form 4261) and the photographs through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. within 7 days after completing the Catastrophic Loss Inspection (Form 4261).
Any insurance loss draft or check issued by the insurance carrier must be made payable to Fannie Mae in care of the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , or as otherwise required by the mortgagee clause. Provided the Lender ContractLender ContractProgram Documents per the Multifamily Selling and Servicing Agreement. contains nothing to the contrary, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is delegated the authority to endorse any insurance loss draft or check on Fannie Mae’s behalf, as follows:
Fannie Mae
By: [Name of Servicer]
By: [Name of Servicer’s Authorized Signer]
[Title of Servicer’s Authorized Signer].
If any insurance loss draft or check made payable to Fannie Mae or the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is cashed by the BorrowerBorrowerPerson who is the obligor per the Note. without proper endorsement by Fannie Mae or the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must instruct the BorrowerBorrowerPerson who is the obligor per the Note. to send the funds to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. within 5 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. . If the BorrowerBorrowerPerson who is the obligor per the Note. does not send the funds, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must contact Multifamily Asset ManagementMultifamily Asset ManagementTeam that can be contacted at [email protected]. immediately.
If the insurance loss draft or check is payable to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is authorized to endorse the draft or check and apply the proceeds in accordance with this Section. The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must also send the Insurer an Insurance Loss Payee Notice Letter (Form 4803) so that all future insurance loss drafts and checks will be issued to Fannie Mae in care of the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. . The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must retain a copy of the Insurance Loss Payee Notice Letter (Form 4803) in its Servicing FileServicing FileYour file for each Mortgage Loan serviced. .
If the insurance loss draft or check is not made payable to either Fannie Mae or the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must return it to the insurance carrier and request the loss draft or check be reissued in the name of Fannie Mae and sent to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. . If the check has already been cashed by the BorrowerBorrowerPerson who is the obligor per the Note. , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must demand those funds be either paid by the BorrowerBorrowerPerson who is the obligor per the Note. to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. and/or deposited in a Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. meeting the requirements of Part V, Chapter 3: Custodial Accounts.
The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must review the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. to confirm no contrary requirements exist regarding the application of insurance loss proceeds (e.g., where the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. require the noteholder to “reasonably” approve the application of insurance proceeds, where the noteholder is to apply commercially reasonable standards, or where the noteholder has the power to approve in its sole discretion).
If any of the following conditions exist, Fannie Mae will determine, in its sole discretion, whether to require the insurance loss proceeds to be (i) applied to the UPBUPBUnpaid Principal Balance , or (ii) used to repair and restore 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). :
- a default has occurred and is continuing under the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ;
- the combination of insurance proceeds and BorrowerBorrowerPerson who is the obligor per the Note. funds is insufficient to complete the necessary PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). repairs for restoration to a condition fit for human habitation and meeting all applicable permitting requirements;
- prior to the commencement of any restoration work, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. determines that, upon completion of the repair and restoration work, 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). will not be capable of generating sufficient income to cover all operating expenses, required Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. deposits, P&IP&IPrincipal and interest on 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. , and required payments on any subordinate debt secured by 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). , or will otherwise meet a 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. or other test required by the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; or
- the repair and restoration work will not be completed by the earlier of (i) the Maturity DateMaturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. , or (ii) within 1 year from the date of the casualty loss.
Based upon the Borrower’sBorrower’sPerson who is the obligor per the Note. plan of action and the Servicer’sServicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. overall assessment, and provided none of the conditions listed in Part V, Chapter 4: Asset Management: Loan Document Administration, Section 414.04: Required Casualty Loss Property Inspection exist, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. has the authority to:
- hold the proceeds to incrementally reimburse the BorrowerBorrowerPerson who is the obligor per the Note. for the cost of repairing the damage and restoring 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). to habitable condition; or
- recommend to Fannie Mae that the proceeds be applied to the UPBUPBUnpaid Principal Balance 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. by submitting a request through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. .
All insurance loss proceeds will be held to reimburse the BorrowerBorrowerPerson who is the obligor per the Note. in increments for the cost of repairing the damage and restoring 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). . If the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). will be restored to habitable condition, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must:
- deposit all insurance loss proceeds in a Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. meeting the requirements of Part V, Chapter 3: Custodial Accounts, to incrementally reimburse the BorrowerBorrowerPerson who is the obligor per the Note. for the cost of repairing the damage;
- require the BorrowerBorrowerPerson who is the obligor per the Note. to deposit, in the same Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. , funds equal to the difference between (a) the Servicer’sServicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. estimate of the total cost to repair and restore 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). to its pre-casualty condition, and (b) the amount of the insurance proceeds;
- for losses greater than $75,000, prepare and have the BorrowerBorrowerPerson who is the obligor per the Note. execute the applicable Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) for use with the 6000 series Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. if documented before the June 2019 Loan DocumentLoan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. publication, or Insurance Loss Proceeds Collateral Agreement (Form 6639) for use with the 4000 series Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , specifying the terms and conditions under which the funds held in the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. will be released to the BorrowerBorrowerPerson who is the obligor per the Note. (Form 6615) is not required for 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. with Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. documented after the June 2019 Loan DocumentLoan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. publication); and
- submit a copy of any applicable Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639) through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. .
The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may waive the above requirement that the BorrowerBorrowerPerson who is the obligor per the Note. deposit additional funds into the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. if (i) the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. deposits all insurance loss proceeds into the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. , and (ii) determines that the BorrowerBorrowerPerson who is the obligor per the Note. , Key PrincipalsKey PrincipalsPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. , and PrincipalsPrincipalsPerson who owns or controls specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals, and Guarantors. have sufficient funds to repair and restore 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). when the insurance loss proceeds alone are insufficient.
Within 7 days of execution, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must submit through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. copies of:
- any applicable Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639);
- any Report of Multifamily Hazard Insurance Loss (Form 178); and
- if required and completed, a copy of the Multifamily Catastrophic Loss Inspection (Form 4261).
The Multifamily Catastrophic Loss Inspection (Form 4261) must be submitted through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. within 7 days after the later of:
- the execution of any Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639); or
- the completion of the Multifamily Catastrophic Loss Inspection (Form 4261).
The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must send to Multifamily Certification and CustodyMultifamily Certification and CustodyTeam responsible for taking custody of and certifying Mortgage Loans that can be contacted at [email protected], (800) 940-4646, or for submissions: Fannie Mae (Multifamily) Certification and Custody 21240 Ridgetop Circle Suite 125-130 Sterling, VA 20166. within 15 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. the original executed copy of any Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639), and retain in its Servicing FileServicing FileYour file for each Mortgage Loan serviced. the original:
Before the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. disburses any funds to the BorrowerBorrowerPerson who is the obligor per the Note. for repair or restoration work the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must:
- have any applicable executed Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639);
- have on deposit in a Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. all insurance loss proceeds and, unless waived as provided above, sufficient BorrowerBorrowerPerson who is the obligor per the Note. funds to cover the estimated cost to complete the repair and restoration work;
- except in the case of minor casualties, have copies of all applicable building permits and other permits/authorizations required to carry out the repair and restoration work;
- except in the case of minor casualties, review (or have a qualified professional review) and approve any plans and specifications relating to the repair and restoration work;
- obtain from the BorrowerBorrowerPerson who is the obligor per the Note. the identities of each principal contractor, architect, and engineer who will be involved in the repair and restoration work, and be satisfied with their qualifications (including assurance each is appropriately licensed and bonded); and
- obtain evidence of builder’s risk insurance, if required, in accordance with Part II, Chapter 5: Property and Liability Insurance, Section 501.02E: Builder’s Risk Insurance.
Any emergency work required to protect 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). or correct a condition threatening the health or safety of the tenants must be undertaken immediately by the BorrowerBorrowerPerson who is the obligor per the Note. , even if the forgoing requirements have not been complied with.
| 414.12 | |
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Before disbursing funds, including the final disbursement, to the BorrowerBorrowerPerson who is the obligor per the Note. for each disbursement request, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must be satisfied that:
- all repair and restoration work has been completed in a good and workmanlike manner and in accordance with any applicable plans and specifications, as evidenced by submissions from the BorrowerBorrowerPerson who is the obligor per the Note. and, if applicable, by the Servicer’sServicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. or a qualified professional’s inspection of the completed work;
- all related invoices for items and services have been paid, unless the BorrowerBorrowerPerson who is the obligor per the Note. has satisfied any applicable pre-conditions of the Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639) 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;
- the necessary release of LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. or LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. waivers have been submitted by all contractors, and 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. , including the Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639).
| 414.12B | |
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The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must approve and disburse funds related to each BorrowerBorrowerPerson who is the obligor per the Note. request in accordance with the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , including any applicable Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639). Funds must be disbursed no more frequently than once a month, unless:
- the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. determines that more frequent disbursements of funds are appropriate and can be managed effectively; or
- the disbursement is equal to or greater than $10,000, or is the final disbursement of proceeds.
| 414.12C | |
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Each of the Borrower’sBorrower’sPerson who is the obligor per the Note. disbursement requests must be in writing and must specify, at a minimum:
- the specific repair and restoration work for which reimbursement is being sought;
- the quantity and price of all materials (grouped by type or category) or specific replacement items (e.g., appliances) purchased; and
- the cost of all contracted labor or other services.
The Borrower’sBorrower’sPerson who is the obligor per the Note. disbursement requests must be accompanied by:
- a BorrowerBorrowerPerson who is the obligor per the Note. certification that the repair and restoration work was completed in a good and workmanlike manner, in accordance with any plans and specifications previously approved by the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , and 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). ;
- 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; and
- 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 under the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , including any applicable Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639).
| 414.12D | |
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The amount of each disbursement (other than the final disbursement) may not exceed the lesser of:
(i) an amount equal to:
- the actual cost of the repair and restoration work covered by the disbursement request, or, if the work was done under a contract or subcontract pursuant to which other work remains to be done, an amount equal to 90% of the actual cost of the repair and restoration work covered by the disbursement request (i.e., a 10% holdback is required if the work under the applicable contract or subcontract has not been completed in full); plus
- 100% of the cost of any materials used, or to be used, in connection with the repair and restoration work, if at the time of the disbursement request, title to the materials has passed to the BorrowerBorrowerPerson who is the obligor per the Note. and the materials have been installed, or are being properly stored, on 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). ; or
(ii) an amount equal to the difference between:
- the balance of the Collateral Agreement Custodial AccountCollateral Agreement Custodial AccountCustodial account established by the Servicer for depositing funds received from the Borrower for Collateral Agreements. at the time of the disbursement request; and
- the estimated cost of all remaining repair and restoration work at that time of the disbursement request.
Upon satisfactory completion of all required repair and restoration work, and satisfaction of all other applicable conditions of the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , including any applicable Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639), the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must:
- disburse all remaining funds to the BorrowerBorrowerPerson who is the obligor per the Note. ; and
- submit through the MAMPMAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. a final Report of Multifamily Hazard Insurance Loss (Form 178) to indicate that all work was satisfactorily completed.
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The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must ensure that all actions taken with respect to each BorrowerBorrowerPerson who is the obligor per the Note. disbursement request are appropriately documented in its Servicing FileServicing FileYour file for each Mortgage Loan serviced. .
The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must notify Multifamily Asset ManagementMultifamily Asset ManagementTeam that can be contacted at [email protected]. immediately if the BorrowerBorrowerPerson who is the obligor per the Note. fails to:
- proceed diligently with any necessary repair and restoration work;
- perform the work satisfactorily; or
- perform in accordance with the terms of the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , including any applicable Amendment to Multifamily Loan and Security Agreement (Restoration Reserve) (Form 6615) or Insurance Loss Proceeds Collateral Agreement (Form 6639).
The Servicer’sServicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. notice to Multifamily Asset ManagementMultifamily Asset ManagementTeam that can be contacted at [email protected]. must include a description of any steps that the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is taking to resolve the situation.
If the insurance loss proceeds include funds specifically designated to defray administrative costs incurred by the mortgagee in connection with the casualty loss, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may reimburse itself from this designated amount for its actual, reasonable administrative costs. If no such provision is made by the insurer, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may not seek reimbursement for its administrative costs from the proceeds, nor may the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. seek reimbursement separately from the BorrowerBorrowerPerson who is the obligor per the Note. .