1402.05

Streamlined Underwriting

1402.05A

Property

Requirements

Streamlined Underwriting

Appraisal

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

Property Management

If there has been or will be 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). management change, you must comply with Part II, Chapter 1: Attributes and Characteristics, Section 112.01: 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 real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per 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 real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per 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 modify the existing or fund an initial Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. , 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 the Borrower funds during the Mortgage Loan term for Replacements. 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 Pay Preferred Equity payments. and LTVLTVRatio of the actual aggregate UPB of the Mortgage Loan, plus any Pre-Existing Mortgage Loans, plus any Hard Pay 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 ESAESAInvestigation and resulting report (Phase I ESA or Phase II ESA) conducted per Environmental Due Diligence Requirements (Form 4251), identifying if a Property has Recognized Environmental Conditions or Business Environmental Risks. and comply with Part II, Chapter 5: Property and Liability Insurance, Section 503: Environmental Matters unless all the following are met:

 

  • an ESAESAInvestigation and resulting report (Phase I ESA or Phase II ESA) conducted per Environmental Due Diligence Requirements (Form 4251), identifying if a Property has 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 Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. are adequately addressed through an O&M PlanO&M PlanRequired plan for remediating a Recognized Environmental Condition or Business Enivronmental Risk as described in Environmental Due Diligence Requirements (Form 4251). being implemented at 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 BorrowerBorrowerPerson who is the obligor per the Note. certifies, and you confirm, that all appropriate O&M PlansO&M PlansRequired plan for remediating a Recognized Environmental Condition or Business Enivronmental Risk as described in Environmental Due Diligence Requirements (Form 4251). 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 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, in the aggregate, directly or indirectly (together with that Person's Immediate Family Members, if an individual), specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals,… 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 Mortgage Loan guaranty. ;
  • 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 Mortgage Loan guaranty. , and each Key PrincipalKey PrincipalPerson 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 PrincipalPrincipalPerson who owns or controls, in the aggregate, directly or indirectly (together with that Person's Immediate Family Members, if an individual), specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals,… 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 series) 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 Mortgage Loan guaranty. , and each Key PrincipalKey PrincipalPerson 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. ;
    • 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 Mortgage Loan guaranty. , and each Key PrincipalKey PrincipalPerson 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
    • 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 Mortgage Loan guaranty. 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 Mortgage Loan guaranty. , and each Key PrincipalKey PrincipalPerson 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.  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 Mortgage Loan guaranty. .

Operating Procedures

If there was... You must...
  • an unauthorized Transfer/Assumption; or
  • any change in the organizational structure of the Borrower, Guarantor, or any Key Principal or Principal

notify Fannie Mae per:

 

  • Part VI, Chapter 3: Non-Performing Primary Risk Mortgage Loans, Section 305: Notice of Default; or
  • Part VI, Chapter 5: Non-Performing Secondary Risk Mortgage Loans, Section 505: Notice of Default.