1402.05

Streamlined Underwriting

1402.05A

Property

Requirements

Streamlined Underwriting

Zoning

You must perform a non-conforming use analysis and comply with Part II, Chapter 3: Legal Compliance, Section 301: Zoning and Legally Non-Conforming Status if 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). was rezoned after the Mortgage Loan Origination DateMortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. , either

 

  • causing it to become a non-conforming use, or
  • restricting the right to rebuild an existing non-conforming use.

A new zoning and non-conforming use analysis is not required if the zoning has not changed.

Appraisal

You must obtain a new AppraisalAppraisalWritten statement independently and impartially prepared by a qualified appraiser stating an opinion of the market value of the Property as of a specific date, supported by the presentation and analysis of relevant market information. .

Property Management

If there has been or will be a 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). management change, you must comply with Part II, Chapter 1: Attributes and Characteristics, Section 111.01: Property Management.

Property Condition Assessment Report

You must obtain a PCA ReportPCA ReportProperty Condition Assessment Report documenting the findings of a PCA. if the Supplemental Mortgage LoanSupplemental Mortgage LoanMortgage Loan purchased by Fannie Mae that is subordinated to, and has a Mortgage Loan Origination Date after, the Senior Mortgage Loan that is also owned by Fannie Mae. 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 reveals any adverse change in property condition or life safety issues.

 

A PCA ReportPCA ReportProperty Condition Assessment Report documenting the findings of a PCA. is not required if:

 

  • there has been no adverse change;
  • the existing PCA ReportPCA ReportProperty Condition Assessment Report documenting the findings of a PCA. is less than 3 years old;
  • all immediate repairs identified in the existing PCA ReportPCA ReportProperty Condition Assessment Report documenting the findings of a PCA. have been satisfactorily completed; and
  • the most recent 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 indicates an overall rating of 1 or 2.

Replacement Reserves
  • If the PCA ReportPCA ReportProperty Condition Assessment Report documenting the findings of a PCA. indicates a need to increase the existing or fund an initial Replacement ReserveReplacement ReserveCustodial Account established by the Lender and funded by deposits from the Borrower over the term of the Mortgage Loan to fund the replacement of capital items at the Property. , you must ensure the funding by amending the Replacement Reserve ScheduleReplacement Reserve ScheduleThe Required Replacement Schedule to the Multifamily Loan Agreement (Form 6001 series) and the applicable parts of the Multifamily Loan Agreement (or other agreement approved by Fannie Mae), that evidence the: Borrower’s agreement to replace identified capital items and perform required….
  • Even if there is no funding or only partial funding for a Pre-Existing Mortgage LoanPre-Existing Mortgage LoanMultifamily residential real estate loan secured by Liens against the Property having higher priority than the Lien securing the Subordinate Loan purchased by Fannie Mae. , you must fully fund the Replacement ReserveReplacement ReserveCustodial Account established by the Lender and funded by deposits from the Borrower over the term of the Mortgage Loan to fund the replacement of capital items at the Property. if the combined 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. and LTVLTVRatio of the actual aggregate UPB of the Mortgage Loan, plus any Pre-Existing Mortgage Loans, plus any Hard Preferred Equity, plus any Mezzanine Financing, to the value of the Property, expressed as a percentage.  for all Pre-Existing Mortgage LoansPre-Existing Mortgage LoansMultifamily residential real estate loan secured by Liens against the Property having higher priority than the Lien securing the Subordinate Loan purchased by Fannie Mae. and the Supplemental Mortgage LoanSupplemental Mortgage LoanMortgage Loan purchased by Fannie Mae that is subordinated to, and has a Mortgage Loan Origination Date after, the Senior Mortgage Loan that is also owned by Fannie Mae. is TierTierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). 2.

Environmental Site Assessment (ESA)

You must obtain a new or updated ESAESAReport (either a Phase I ESA or a Phase II ESA) identifying whether a Property is subject to Recognized Environmental Conditions or Business Environmental Risks. and comply with Part II, Chapter 5: Property and Liability Insurance, Section 502: Environmental Matters unless all the following are met:

 

  • an ESAESAReport (either a Phase I ESA or a Phase II ESA) identifying whether a Property is subject to Recognized Environmental Conditions or Business Environmental Risks. was performed for a Pre-Existing Mortgage LoanPre-Existing Mortgage LoanMultifamily residential real estate loan secured by Liens against the Property having higher priority than the Lien securing the Subordinate Loan purchased by Fannie Mae. ;
  • an Environmental Professional performs an environmental database review and identifies no
    • potential environmental concerns (as defined in ASTMASTMAmerican Society for Testing Materials E1528 - Standard Practice for Limited Environmental Due Diligence: Transaction Screen), or 
    • adverse conditions requiring further due diligence;
  • the BorrowerBorrowerPerson who is the obligor per the Note. executes an Environmental Indemnity Agreement (Form 6085);
  • you confirm that any disclosed Prohibited Activities or Conditions per the Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. are adequately addressed through an O&M PlanO&M PlanWritten plan, document, or agreement containing ongoing operating, maintenance, or monitoring actions for the Property or its Improvements. being implemented at 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). ; and
  • the BorrowerBorrowerPerson who is the obligor per the Note. certifies, and you confirm, that all appropriate O&M PlansO&M PlansWritten plan, document, or agreement containing ongoing operating, maintenance, or monitoring actions for the Property or its Improvements. are in place and being fully and properly implemented.

Property and Liability Insurance

You must base the required amounts and coverages of all property and liability insurance on the combined UPBUPBUnpaid Principal Balance of the Supplemental Mortgage LoanSupplemental Mortgage LoanMortgage Loan purchased by Fannie Mae that is subordinated to, and has a Mortgage Loan Origination Date after, the Senior Mortgage Loan that is also owned by Fannie Mae. and all Pre-Existing Mortgage LoansPre-Existing Mortgage LoansMultifamily residential real estate loan secured by Liens against the Property having higher priority than the Lien securing the Subordinate Loan purchased by Fannie Mae. .

Title Insurance

You must ensure the BorrowerBorrowerPerson who is the obligor per the Note. obtains a new title insurance policy.
1402.05B

Borrower, Guarantor, Key Principals, and Principals

Requirements

You must:

  • identify all Key PrincipalsKey PrincipalsAny Person 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 who 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.  of the BorrowerBorrowerPerson who is the obligor per the Note.  and GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. ;
  • confirm the original underwriting of the BorrowerBorrowerPerson who is the obligor per the Note. , GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. , and each Key PrincipalKey PrincipalAny Person 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 who may be required to provide a Guaranty.  and PrincipalPrincipalPerson 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.  per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals;
  • obtain updates to the:
    • financial statements for all parties relevant to the transaction;
    • Multifamily Underwriting Certificates (Form 6460) for the BorrowerBorrowerPerson who is the obligor per the Note. , GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. , and each Key PrincipalKey PrincipalAny Person 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 who may be required to provide a Guaranty. ;
    • organizational documents of the BorrowerBorrowerPerson who is the obligor per the Note. , GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. , and each Key PrincipalKey PrincipalAny Person 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 who may be required to provide a Guaranty. ; and
    • good standing certificate from the jurisdiction where an entity BorrowerBorrowerPerson who is the obligor per the Note. and GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. are organized;
  • confirm that the organizational structure of the BorrowerBorrowerPerson who is the obligor per the Note. , GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. , and each Key PrincipalKey PrincipalAny Person 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 who may be required to provide a Guaranty.  complies with Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals; and
  • confirm that no unauthorized change has been made to the organizational structure or organizational documents of the BorrowerBorrowerPerson who is the obligor per the Note.  or the GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. .

Operating Procedures

You must contact Fannie Mae per Part V, Chapter 7: Non-Performing Mortgage Loans, Section 704: Notice of Default; Reservation of Rights if there has been:

  • an unauthorized Transfer/AssumptionTransfer/AssumptionTransaction resulting in a change in the ownership of the Borrower or Property. ; or
  • any change in the organizational structure of the BorrowerBorrowerPerson who is the obligor per the Note. , GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other guaranty related to the Mortgage Loan. , or any Key PrincipalKey PrincipalAny Person 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 who may be required to provide a Guaranty. or PrincipalPrincipalPerson 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. .