Generally

It is not unusual for a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). securing a Non-Performing Mortgage LoanNon-Performing Mortgage LoanMortgage Loan that is subject to an uncured default. to be in need of repairs during the default resolution process.  Generally, a Payment DefaultPayment DefaultFailure of a Borrower to pay when due and in full any payment required for the Mortgage Loan, including, but not limited to, principal, interest, late charges, default interest, fees, prepayment premium, escrows, or other collateral accounts for taxes, insurance premiums, and assessments, other… or a Performance DefaultPerformance DefaultFailure of a Borrower to perform any promise or covenant within any applicable grace periods under the related Mortgage Loan other than a failure that constitutes a Payment Default. will result in a default under the Collateral AgreementsCollateral AgreementsAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. for Replacement ReservesReplacement ReservesCustodial Account funded during the Mortgage Loan term for major maintenance and replacing capital items per the Loan Documents. , Operating Deficit, Completion/RepairsCompletion/RepairsImmediate Repairs identified by the Property Condition Assessment and required by the Lender to be included in the Completion/Repair Schedule or Completion/Repair Agreement (or a Certificate of Borrower, if applicable). , or other Collateral AgreementsCollateral AgreementsAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. .  When the BorrowerBorrowerPerson who is the obligor per the Note. is in default under a Collateral AgreementCollateral AgreementAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. , the Special ServicerSpecial ServicerServicer (which may be Fannie Mae, the Servicer, or a third-party special servicer contracted by Fannie Mae) responsible for implementing the loss mitigation actions for a Non-Performing Mortgage Loan. has discretion in applying the reserves or Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. proceeds either to repairs or replacements or to the payment of amounts due and owing to Fannie Mae under the Loan DocumentsLoan DocumentsAll executed Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .

1.  Primary Risk Mortgage Loans

 As part of its Asset Review for Primary Risk Mortgage LoansPrimary Risk Mortgage LoansMortgage Loan where Fannie Mae bears all losses or where the Lender and Fannie Mae share losses. , as provided in this Chapter, the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must advise Fannie Mae Special Asset ManagementSpecial Asset ManagementTeam performing Fannie Mae’s Special Servicing that can be contacted at [email protected]. of the type of repairs or replacements that are necessary and recommend whether the repairs should be funded from the Collateral AgreementCollateral AgreementAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. funds.   It is Fannie Mae's decision whether or not to accept the recommendation and use the funds for repairs or replacements for Primary Risk Mortgage LoansPrimary Risk Mortgage LoansMortgage Loan where Fannie Mae bears all losses or where the Lender and Fannie Mae share losses. .

2.  Secondary Risk Mortgage Loans

For Secondary Risk Mortgage LoansSecondary Risk Mortgage LoansMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted. , the LenderLenderPerson Fannie Mae approved to sell or service Mortgage Loans. must provide a SWAT describing the actions it intends to take to ensure the repair 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 to prevent further PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). deterioration.  The decision whether or not to use Collateral AgreementCollateral AgreementAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. funds for repairs or replacements is the Special ServicerSpecial ServicerServicer (which may be Fannie Mae, the Servicer, or a third-party special servicer contracted by Fannie Mae) responsible for implementing the loss mitigation actions for a Non-Performing Mortgage Loan. 's.  When making the decision whether to use the Collateral AgreementCollateral AgreementAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. funds for repairs or replacements, the level of cooperation from the BorrowerBorrowerPerson who is the obligor per the Note. and remitting the monthly net operating income must be a factor to consider.