218.03
Defeasance Option Procedures
To accomplish the defeasance, the following procedures must be followed:
| 218.03A | |
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ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must obtain the most current DefeasanceDefeasanceTransaction where a Property is released from the lien of the Security Instrument and the Lender receives a valid and perfected lien and security interest in substitute collateral acceptable to Fannie Mae and the cash flows thereunder. documents from the Fannie Mae website. The DefeasanceDefeasanceTransaction where a Property is released from the lien of the Security Instrument and the Lender receives a valid and perfected lien and security interest in substitute collateral acceptable to Fannie Mae and the cash flows thereunder. documents consist of the Defeasance Notice (Form 4622) and other closing documents required by Fannie Mae in order for the defeasance to occur.
| 218.03B | |
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The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must complete the Defeasance Notice (Form 4622) after verifying the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. is eligible for defeasance and obtaining from the BorrowerBorrowerPerson who is the obligor per the Note. the date on which the BorrowerBorrowerPerson who is the obligor per the Note. desires to consummate the DefeasanceDefeasanceTransaction where a Property is released from the lien of the Security Instrument and the Lender receives a valid and perfected lien and security interest in substitute collateral acceptable to Fannie Mae and the cash flows thereunder. . The Defeasance Close Date may not be more than 45 calendar days nor less than 30 calendar days after the date on which the Defeasance Notice is received by 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 use the Defeasance Calculator application on the Fannie Mae web site to estimate the Defeasance Deposit and the estimated Defeasance Deposit must be inserted in the appropriate box in the Defeasance Notice. The information on the Defeasance Notice will not be final until it is confirmed by Fannie Mae. Until then, the Defeasance Deposit and other information are estimates. The Defeasance Notice will specify (a) whether a Fannie Mae debt instrument will be offered for use as the substitute collateral and, if not, that U.S. Treasury SecuritiesSecuritiesMBS, PFP MBS, or REMIC. will be the substitute collateral; and (b) whether the successor entity will be designated by Fannie Mae or BorrowerBorrowerPerson who is the obligor per the Note. , and (c) the amount of the Defeasance Commitment Fee.
To be effective, the BorrowerBorrowerPerson who is the obligor per the Note. must execute and send the Defeasance Notice to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. so that the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. receives the Defeasance Notice no earlier than 11:00 a.m. and no later than 3:00 p.m. ET on a Business DayBusiness DayAny 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 ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must then sign and execute the Defeasance Notice and fax the Defeasance Notice and a copy of the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. to be defeased to its Fannie Mae RepresentativeFannie Mae RepresentativeFannie Mae personnel who assist you with various business matters (e.g., Fannie Mae Deal Team, pricing, delivery, servicing, asset management, etc.). .
Fannie Mae must receive the fax by 5:00 p.m. ET on the same day that the DefeasanceDefeasanceTransaction where a Property is released from the lien of the Security Instrument and the Lender receives a valid and perfected lien and security interest in substitute collateral acceptable to Fannie Mae and the cash flows thereunder. Deposit was calculated for verification by Fannie Mae.
| 218.03C | |
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A Defeasance Commitment Fee equal to 1% of the scheduled 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 Defeasance Close Date, must be 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. no later than the date and time when the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. receives the executed Defeasance Notice from 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 wire the Defeasance Commitment Fee to Fannie Mae within 24 hours after receipt of the Borrower'sBorrower'sPerson who is the obligor per the Note. executed Defeasance Notice.
Fannie Mae will verify 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. information contained in the Defeasance Notice as well as the Mortgage Loan'sMortgage Loan'sMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. eligibility for defeasance. After verification and within two (2) 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. after the initial receipt of the Defeasance Notice from the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , Fannie Mae will sign the Defeasance Notice and fax it back to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. along with an Exhibit that details the monthly cash flows of the Fannie Mae debt instrument that will replace 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). as collateral for the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. .
The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. will then fax the verified Defeasance Notice to the BorrowerBorrowerPerson who is the obligor per the Note. on the same day that the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. receives the verified Defeasance Notice from Fannie Mae. In the event that Fannie Mae made changes to the Defeasance Notice, the BorrowerBorrowerPerson who is the obligor per the Note. must initial the changed portions of the Defeasance Notice and fax it back to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. on that same day. The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must then immediately fax the BorrowerBorrowerPerson who is the obligor per the Note. -initialed Defeasance Notice to Fannie Mae.
If the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. does not
- receive the Defeasance Commitment Fee, and
- provide confirmation of the Defeasance Notice to the BorrowerBorrowerPerson who is the obligor per the Note. ,
| 218.03E | |
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On or before the Defeasance Close Date, the BorrowerBorrowerPerson who is the obligor per the Note. must deliver to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. a Defeasance Pledge Agreement (Form 4529), creating a perfected security interest in the substitute collateral in favor of Fannie Mae.
| 218.03F | |
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The BorrowerBorrowerPerson who is the obligor per the Note. must assign all its obligations and rights under the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. , together with the substitute collateral, to a successor entity designated by Fannie Mae or, if not so designated by Fannie Mae, designated by BorrowerBorrowerPerson who is the obligor per the Note. and acceptable to Fannie Mae. The BorrowerBorrowerPerson who is the obligor per the Note. and the successor entity shall execute and deliver to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. a Defeasance Assignment and Assumption Agreement (Form 4528).
| 218.03G | |
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The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must deliver to Fannie Mae by no later than 10 a.m. ET, five (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. before the Defeasance Close Date, the following documents:
- a Borrower's Counsel Opinion Letter (Form 6618) affirming:
- that each DefeasanceDefeasanceTransaction where a Property is released from the lien of the Security Instrument and the Lender receives a valid and perfected lien and security interest in substitute collateral acceptable to Fannie Mae and the cash flows thereunder. Document constitutes the valid and legally binding obligation of the BorrowerBorrowerPerson who is the obligor per the Note. , enforceable against the BorrowerBorrowerPerson who is the obligor per the Note. in accordance with its terms;
- that the defeasance is not subject to avoidance under any applicable federal or state laws;
- that, if the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. is held by a REMIC Trust, then the defeasance has been effected in such a way that does not adversely affect the REMIC Trust; and
- such other opinions, certificates, documents or instruments as ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may reasonably request;
- the Defeasance Assignment and Assumption Agreement (Form 4528); and
- the Defeasance Pledge Agreement (Form 4529).
Transmittal of these documents shall be accompanied by a completed Multifamily Defeasance Transmittal Form (Form 4631).
| 218.03H | |
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On or before the Defeasance Close Date, the BorrowerBorrowerPerson who is the obligor per the Note. must pay to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. an amount equal to the sum of:
- the next scheduled P&IP&IPrincipal and interest payment due under the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. ;
- all other sums then due and payable under the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. , the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. and any other Loan DocumentLoan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; and
- all costs and expenses incurred by the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. in connection with the defeasance, including any out-of-pocket fees and disbursements of the Servicer'sServicer'sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. legal counsel.
| 218.03I | |
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If a Fannie Mae investment security will be the substitute collateral, then, on or before 3:00 p.m. ET on the Defeasance Close Date, the BorrowerBorrowerPerson who is the obligor per the Note. must pay the Defeasance Deposit (reduced by the Defeasance Commitment Fee) to the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. to be used by the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , as the Borrower'sBorrower'sPerson who is the obligor per the Note. agent, to purchase the Fannie Mae Investment Security.
The BorrowerBorrowerPerson who is the obligor per the Note. or Closing Agent must wire the Defeasance Deposit to ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. by 3:00 p.m. ET on the Defeasance Closing Date. The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must wire the Defeasance Deposit (reduced by the Defeasance Commitment Fee) to Fannie Mae for receipt by 5:00 p.m. ET on the Defeasance Closing Date.
| 218.03J | |
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Upon the Borrower'sBorrower'sPerson who is the obligor per the Note. compliance with the DefeasanceDefeasanceTransaction where a Property is released from the lien of the Security Instrument and the Lender receives a valid and perfected lien and security interest in substitute collateral acceptable to Fannie Mae and the cash flows thereunder. requirements, 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 released from the lien of the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. . Upon release 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). , the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. will be secured by the pledge of the Substitute Collateral.
If the BorrowerBorrowerPerson who is the obligor per the Note. timely pays the Defeasance Commitment Fee and the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. and the BorrowerBorrowerPerson who is the obligor per the Note. timely transmit a signed facsimile copy of the Defeasance Notice, but the BorrowerBorrowerPerson who is the obligor per the Note. fails to consummate the defeasance, Fannie Mae shall have the right to retain the Defeasance Commitment Fee as liquidated damages for the Borrower'sBorrower'sPerson who is the obligor per the Note. default and, subject to the terms and conditions of the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. , the BorrowerBorrowerPerson who is the obligor per the Note. shall be released from all further obligation to defease the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 series, any other Fannie Mae-approved note, and all applicable addenda, schedules, and exhibits. under the given Defeasance Notice.
| 218.03L | |
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In the event that the DefeasanceDefeasanceTransaction where a Property is released from the lien of the Security Instrument and the Lender receives a valid and perfected lien and security interest in substitute collateral acceptable to Fannie Mae and the cash flows thereunder. is not consummated on the Defeasance Closing Date for any reason, the BorrowerBorrowerPerson who is the obligor per the Note. must reimburse the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. for all third-party costs and expenses incurred by the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. in its reliance on the Defeasance Notice executed by the BorrowerBorrowerPerson who is the obligor per the Note. , within five (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. after the BorrowerBorrowerPerson who is the obligor per the Note. receives a written demand for this reimbursement.
| 218.03M | |
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Fannie Mae will transfer the defeased 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. from the Servicer'sServicer'sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. servicing portfolio effective on the first day of the second month following the Defeasance Closing Date. The ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. will be required to report and remit payments for the next scheduled P&IP&IPrincipal and interest payment collected as part of the Defeasance Closing. Thereafter, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. will no longer be required to perform other servicing requirements for the defeased 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. . Beginning on the 18th calendar day of the second calendar month after the Defeasance Closing Date (or the next Business DayBusiness DayAny 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 such day is not a Business DayBusiness DayAny 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. ) until the maturity of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. will receive the remaining scheduled servicing fee for 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. minus five (5) basis points provided the Authorization for ACH Remittance (Form 4630) has been submitted.