Chapter 1
| Section 101 | |
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Requirements
For a Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 to be eligible for purchase, it must be secured by a multifamily residential property that meets all of the following:
- contains at least 5 dwelling units;
- does not include a stand-alone building containing less than 5 dwelling units (e.g., a single-family structure), unless it:
- was originally constructed as part of a single multifamily development; or
- is situated on the same tax parcel, or shares a tax parcel boundary, with a
- multifamily property, or
- MH Community MH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. ;
- has suitable bathroom and cooking facilities within each unit;
- is located in 1 of the 50 states of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, or Guam;
- is located on a publicly dedicated, all-weather road, or is accessible by a satisfactory easement from this type of road;
- consists of either a single parcel or multiple parcels per Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership ;
- any commercial space is:
- physically part of, and connected to, the multifamily space; or
- a stand-alone building that is on the same tax parcel;
- has adequate water and sewer service, which may be delivered by a public utility or, where commercially acceptable for the market area, by a private system or utility;
- offers a suitable level of utility service (e.g., electrical, natural gas, refuse removal, etc.) for the market area;
- either complies with all applicable statutes, rules, regulations, and housing and building codes, or is being appropriately remediated; and
- has access to police and emergency services.
You must search the internet to confirm, and justify in the Transaction Approval Memo, if the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has:
- any negative press;
- current or prior lawsuits;
- fair housing violations or other sanctions; and/or
- association with bad actors.
Guidance
To determine if a single-family structure was originally constructed as part of a single multifamily development, you should consider if all buildings:
- were originally constructed at the same time;
- were historically bought, operated, and sold as 1 Project ProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. since originally constructed;
- are generally consistent in physical appearance, with distinct boundaries such as
- signage,
- gates/fencing,
- shared parking, or
- dedicated streets;
- are located on a single tax parcel or adjacent tax parcels;
- are configured without any non-Borrower BorrowerPerson who is the obligor per the Note. owned parcels or buildings separating/splitting or within the multifamily development; and
- are not part of a predominately homeowner development.
| Section 102 | |
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Requirements
For any Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). that includes Modular Housing Modular HousingMultifamily Improvements located on a Property that are comprised of components or modules built off-site, such as modular, prefabricated, panelized, or sectional housing, and then assembled and installed on-site on a permanent foundation (and not a chassis). , you must ensure that the:
- scope of work for the completed Property Condition Assessment Property Condition AssessmentAssessment of the Property's physical condition and historical operation. will include Module 5.6 of the Instructions for Performing a Multifamily Property Condition Assessment (PCA) ( Form 4099 ); and
- Modular Housing
Modular HousingMultifamily Improvements located on a Property that are comprised of components or modules built off-site, such as modular, prefabricated, panelized, or sectional housing, and then assembled and installed on-site on a permanent foundation (and not a chassis).
:
- was constructed by a manufacturer with a proven history of constructing modular components for multifamily properties;
- does not include the presence of any areas of “Heightened Property Condition Concerns” per Module 5.6 of Form 4099 ; and
- is comparable in quality and condition to properties with site-built Improvements ImprovementsBuildings, 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). in the market.
| Section 103 | |
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| 103.01 | |
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Requirements
If more than 1 Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). secures a Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 , you must determine if all multifamily buildings are part of the same Project ProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. . Buildings on multiple Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). are a single Project ProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. if all Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). :
- are only separated by publicly dedicated or private streets primarily intended for local residents or access to the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , and not by major arteries or thoroughfares (i.e., streets primarily intended for traffic traveling through the area); and
- have the following characteristics:
- all buildings have been operated as a single complex (e.g., no buildings are marketed separately to tenants);
- the Properties
PropertiesMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
are within
- 0.5 miles or less of each other, and
- the same submarket;
- amenities at any building are available to tenants in other buildings;
- amenities located in one building do not materially, adversely affect the rents at other buildings without similar amenities; and
- the overall building configuration across the Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). does not result in elevated vacancy levels at any building.
If multiple Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). are not part of the same Project ProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. , you must:
- collect detailed individual data for each Property
PropertyMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
, including separate
- rent rolls, and
- operating statements;
- enter each Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). in the “Properties” section of DUS Gateway DUS GatewayMultifamily pre-acquisition system, or any successor systems, recording deal registration, Pre-Review and/or waiver tracking, Mortgage Loan Commitments, and decision records. ;
- complete a Multifamily Affordability Estimator (MAE) for each Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). per Part I, Chapter 2: Mortgage Loan, Section 201: Registration and Multifamily Affordability Estimator ;
- require every third-party report to assess
- the Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). in each Project ProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. separately, and
- all Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). in the aggregate; and
- enter each Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). as a separate Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). Collateral CollateralProperty, Personal Property, or other property securing a Mortgage Loan. record in C&D C&DElectronic committing and delivery system used for issuing and confirming Commitments for acquiring Mortgage Loans, or any such successor system. .
When a Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 not in a Credit Facility Credit FacilityStructured Transaction governed by a Master Credit Facility Agreement requiring Mortgage Loans and Properties to be cross-defaulted, and cross-collateralized. is secured by multiple Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). (whether in the same or multiple Projects ProjectsMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. ), each multifamily Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). must individually:
- comply with the minimum occupancy requirements in
- be located in the same MSA MSAGeographic delineation for a metropolitan area determined by the U.S. Census Bureau. ; and
- have an acceptable Property
PropertyMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
condition based on
- your site inspection, and
- any required PCA PCAAssessment of the Property's physical condition and historical operation. .
Guidance
For a Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 secured by multiple Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). not part of the same Project ProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. , you may:
- accept a consolidated third-party report for multiple Projects ProjectsMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. , if each Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is identified and assessed separately; and
- consolidate the Underwritten NCF NCFAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. and overall underwriting in a single Transaction Approval Memo.
Requirements
| If... | Then... |
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A Mortgage Loan
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The Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 and each Borrower BorrowerPerson who is the obligor per the Note. must comply with
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| Section 104 | |
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Requirements
When you register a Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 in DUS Gateway DUS GatewayMultifamily pre-acquisition system, or any successor systems, recording deal registration, Pre-Review and/or waiver tracking, Mortgage Loan Commitments, and decision records. or submit a Transfer/Assumption Transfer/AssumptionTransaction changing the ownership of the Borrower or Property. in the MAMP MAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. , you must:
- use Property Check to search the primary Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). address(es) (including those identified in Part II, Chapter 1: Attributes and Characteristics, Section 103: Multiple Properties ); and
- receive a “Based on the address entered, you may proceed processing the transaction involving this property.” response for each address entered.
Guidance
Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! monitors all Property Check search details.
Operating Procedures
The Property Check application is available at https://multifamily.fanniemae.com/applications-technology/property-check.
| Property Check Frequently Asked Questions | |
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| Question | Answer |
| What information do you need to perform a Property Check? |
You must enter the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code).
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| How does Property Check respond? |
You will receive a response similar to:
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| What about confidentiality? |
You must:
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| Section 105 | |
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Requirements
You must ensure that the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is owned in fee simple, unless the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is held under an acceptable Leasehold LeaseholdProperty held under a long-term lease or Ground Lease. estate.
| Section 106 | |
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| 106.01 | |
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Requirements
If the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has a Ground Lease Ground LeaseContract for the rental of land, usually on a long term basis. , the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 collateral must include a Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on the Leasehold LeaseholdProperty held under a long-term lease or Ground Lease. estate.
You must ensure that the Ground Lease Ground LeaseContract for the rental of land, usually on a long term basis. complies with the Ground Lease Review Checklist ( Form 6479 ), unless
- the ground lessor joins with the Borrower BorrowerPerson who is the obligor per the Note. in executing the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. and grants a Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on the ground lessor's fee estate, or
- the absence of the Leasehold LeaseholdProperty held under a long-term lease or Ground Lease. estate would not have a material adverse effect on the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). operation or value.
| 106.02 | |
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Requirements
You must:
- establish an escrow for ground rents;
- ensure the Borrower BorrowerPerson who is the obligor per the Note. deposits sufficient funds; and
- make all payments due per the Ground Lease Ground LeaseContract for the rental of land, usually on a long term basis. .
Requirements
You must obtain an executed Ground Lessor Estoppel Certificate ( Form 6495 ).
| 106.04 | |
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Requirements
You must:
- review and analyze the Ground Lease Ground LeaseContract for the rental of land, usually on a long term basis. to ensure compliance with the requirements of this Section; and
- retain the completed Form 6479 in your Servicing File Servicing FileYour file for each Mortgage Loan serviced. .
| Section 107 | |
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| 107.01 | |
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Requirements
You must ensure the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). meets these minimum occupancy levels:
- 85% physical occupancy; and
- 70% economic occupancy.
These minimum levels apply on the Commitment Date Commitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. and for the preceding 3-month period.
| 107.02 | |
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Requirements
When calculating physical occupancy, you must only include tenants who
- physically occupy the unit, and
- have commenced paying rent.
Guidance
You may include any tenant who:
- was under a standard lease for at least 6 months, then converted to a month-to-month lease when the lease expired; or
- is under a lease with a term of less than 6 months, if shorter-term leases
- are commonly accepted in the market area, and
- do not reflect weakness in the market.
You may include non-revenue producing units such as
- management units,
- employee occupied units,
- maintenance units, and
- model units.
Such units should not exceed what is usual and customary for stabilized properties in the market.
| Section 108 | |
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Requirements
| Certificates of Occupancy | |
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| For any... | You must... |
| Property with construction or rehabilitation work completed within the last 12 months |
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| Other Property |
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Guidance
| No Certificate of Occupancy | |
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| If you cannot obtain... | You should... |
| Copies of certificates of occupancy for a Property (for example, because of the Property's age, or the records of the jurisdiction where the Property is located) |
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| Copies or other sufficient evidence of a certificate of occupancy |
Analyze the risk to the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). if one had never been issued, by considering if:
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| Section 109 | |
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Requirements
If the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is a Phased Property Phased PropertyProperty that is one section of an existing or future complex and the Property is intended to be operated together with another property in the complex, and/or with shared access and amenities. , you must evaluate
- how the Property PropertyMultifamily 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 affected by other phases, and
- if the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). can succeed independently from other phases.
Guidance
In determining if a Phased Property Phased PropertyProperty that is one section of an existing or future complex and the Property is intended to be operated together with another property in the complex, and/or with shared access and amenities. is viable as a separate Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , you should consider if:
- its ownership and operation are separate from all other phases of the complex;
- the Borrower BorrowerPerson who is the obligor per the Note. is able to provide a separate leasing office;
- your underwriting has discounted any benefits derived from staff or facilities shared with other phases;
- the records and accounts used to underwrite the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). are separate from those of other phases;
- any cross-easements for the complex will survive an adverse action against another phase;
- any development of a future phase could materially interfere with or disturb the Property's
Property'sMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
- occupancy,
- marketability,
- or living environment; and
- the Property
PropertyMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
is:
- marketable to tenants or a new owner, separately from other phases;
- visible to the public without passing through another phase of the complex; and
- accessible from a public roadway.
In assessing the impact of future phases on a Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , you should consider:
- the short-term impact of construction activity; and
- long-term implications for the continued economic viability of the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , taking into account the allocation of costs for shared facilities (such as roadways).
Requirements
You may only Deliver DeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. a Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 on a Phased Property Phased PropertyProperty that is one section of an existing or future complex and the Property is intended to be operated together with another property in the complex, and/or with shared access and amenities. if Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! holds all other Mortgage Loans Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 secured by other phases of the complex.
When the Phased Property Phased PropertyProperty that is one section of an existing or future complex and the Property is intended to be operated together with another property in the complex, and/or with shared access and amenities. is owned or Controlled ControlledPossessing, directly or indirectly, the power to direct or cause the management and operations of an entity (e.g., through the ownership of voting securities or other ownership interests, or by contract). by the same Borrower BorrowerPerson who is the obligor per the Note. or Principals PrincipalsPerson 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,… as the other phases in the complex:
- all Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! Mortgage Loans Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 on each phase must be cross-defaulted and cross-collateralized;
- when any new Phased Property
Phased PropertyProperty that is one section of an existing or future complex and the Property is intended to be operated together with another property in the complex, and/or with shared access and amenities.
Mortgage Loan
Mortgage 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.
Test Notes-SV
Test Again
Sub-bullet test1
Sub-bullet test2
is underwritten, the actual amortizing DSCR
DSCROn 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.
(per Form 4254.DEF
) and current LTV
LTVRatio 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 existing Mortgage Loans
Mortgage 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.
Test Notes-SV
Test Again
Sub-bullet test1
Sub-bullet test2
on each phase must comply with Form 4660
for the same loan term, product, and Pricing and Underwriting Tier
Pricing and Underwriting TierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660).
, where each property value is determined by
- dividing the current NCF NCFAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. by the capitalization rate (i.e., a Direct Cap with Sales Comparables analysis),
- broker's opinion of value, or
- most recent Appraisal AppraisalWritten 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. ; and
- the new Phased Property Phased PropertyProperty that is one section of an existing or future complex and the Property is intended to be operated together with another property in the complex, and/or with shared access and amenities. Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 must have a Prepayment Premium Period End Date Prepayment Premium Period End DateLast date when a Borrower owes a Prepayment Premium for a voluntary Mortgage Loan prepayment. on or before the Prepayment Premium Period End Date Prepayment Premium Period End DateLast date when a Borrower owes a Prepayment Premium for a voluntary Mortgage Loan prepayment. of the Mortgage Loans Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 on the other phases.
Guidance
If a future phase is expected, consider issuing the first phase MBS MBSMortgage-Backed Security with a potential future cross.
| Section 110 | |
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| 110.01 | |
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Requirements
This section does not apply to
- Condominium CondominiumStatutorily established Property ownership regime where Condominium Documents designate: individual units for separate ownership; and common areas for shared use and joint ownership by the unit owners. Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , and
- Cooperative CooperativeMultifamily residential property owned by a Cooperative Organization. Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). .
| Shared Use Property Delivery Eligibility for Essential Elements Not Located on the Property | |
|---|---|
| Topic | A Shared Use Property Mortgage Loan is eligible for Delivery if... |
| Documents |
you determine the Shared Use Documents Shared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… do not explicitly prohibit the Essential Elements Essential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … from being rebuilt or repaired after any casualty or condemnation. |
| Property |
the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). benefits from Essential Elements Essential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … per Shared Use Documents Shared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… that:
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| Split Ownership of Units and Essential Elements |
when the Borrower BorrowerPerson who is the obligor per the Note. owns all units subject to the Shared Use Documents Shared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… , and an Affiliate AffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… of the Borrower BorrowerPerson who is the obligor per the Note. or Key Principal Key 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. directly or indirectly owns the Essential Elements Essential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … that benefit only the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , such Affiliate AffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… joins the:
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| Shared Use Property Delivery Eligibility for All Essential Elements | |
|---|---|
| Topic | A Shared Use Property Mortgage Loan is eligible for Delivery if... |
| Financial |
all:
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| Borrower Status |
the Borrower BorrowerPerson who is the obligor per the Note. :
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| 110.02 | |
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| 110.02A | |
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Requirements
You must:
- ensure the Borrower BorrowerPerson who is the obligor per the Note. executes the Modification to Multifamily Loan and Security Agreement Shared Use of Essential Elements Essential ElementsA Shared Use Property’s amenities, common areas or infrastructure: impacting or essential to the: operation, use, value and marketability, leasing, refinancing, and/or zoning or legal compliance; and examples of Essential Elements may include: parking, … ( Form 6276 ); and
- if appropriate per the conditions described in the Estoppel Certificate attached to Form 6276
, use reasonable efforts to obtain from the association or other appropriate party:
- the Estoppel Certificate attached to Form 6276 ; or
- other form providing similar representations.
| 110.02B | |
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Requirements
You must:
- evaluate the Shared Use Documents Shared Use DocumentsAgreements benefiting and/or burdening a Shared Use Property, such as: reciprocal easement agreements (REA); declaration of covenants; conditions and restrictions (CCR); development agreements; shared use agreements; joint ownership agreement or similar agreements governing… ;
- document your evaluation in the Transaction Approval Memo; and
- obtain:
- an ALTA ALTAAmerican Land Title Association title policy per Part II, Chapter 3: Legal Compliance, Section 304: Title Insurance ; and
- ALTA Endorsements (i.e., 5-06, 28-06, and 9-06) if available in the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). jurisdiction.
Guidance
| Shared Use Document Evaluation | |
|---|---|
| Topic | You should review the Shared Use Documents to evaluate... |
| Ownership and Control |
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| Responsibilities and Enforcement |
how an association or governing body:
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| Fees |
the assessment fee structure, including
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| Budget |
the association’s current
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| Mandates |
how the association dictates:
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| Insurance |
the association’s coverage for:
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| Section 111 | |
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Requirements
You must only underwrite actual income from occupied commercial space with an executed lease or lease extension agreement if the:
- remaining lease term is at least 12 months after the Mortgage Loan Origination Date Mortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. ;
- tenant is:
- not an affiliate of the
- Sponsor SponsorPrincipal equity owner and/or primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). ,
- Borrower BorrowerPerson who is the obligor per the Note. ,
- Key Principal Key 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. , or
- any individual or entity within the Borrower's Borrower'sPerson who is the obligor per the Note. ownership structure;
- occupying the unit;
- open for business;
- paying rent; and
- not delinquent on rent due outside the lease’s cure period; and
- not an affiliate of the
- underwritten commercial income includes the actual commercial rent due under the lease within 12 months after the Mortgage Loan Origination Date
Mortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower.
, including any:
- discounts; or
- concessions.
Guidance
Your evaluation of any commercial space's viability should include:
- Appraisal AppraisalWritten 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. sub-market comparable commercial space rents supporting the underwritten rents;
- sub-market data confirming a low commercial space vacancy rate;
- existing sustainable demand for the tenant’s business type; and
- evidence that the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). location has sufficient foot traffic to support the tenant’s business.
| 111.01 | |
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| 111.01A | |
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Requirements
You must analyze all aspects of each Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… and its
- tenants,
- grantees, or
- other beneficiaries.
If Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… approval is required per Part II, Chapter 1: Attributes and Characteristics, Section 111.01B: Lease Approval you must:
- prepare a written summary of the material terms of the Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… ; and
- keep a copy of your summary in your Servicing File Servicing FileYour file for each Mortgage Loan serviced. .
Guidance
As you analyze the Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… , you should consider if:
- each tenant has the ability to fulfill its financial and other performance obligations under the Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… ;
- the Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… insurance provisions are consistent with the insurance requirements in the applicable Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. or otherwise prescribed by Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ;
- each tenant is required to obtain the Lender's
Lender'sPerson Fannie Mae approved to sell or service Mortgage Loans.
consent before the Material Commercial Lease
Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest
for commercial purposes comprising 5% or more of the Property's annual EGI, or
relating to:
solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other…
is
- assigned,
- subleased,
- subcontracted, or
- otherwise transferred; and
- the tenant
- has early termination clauses, and
- understands the conditions under which they can terminate, including
- a material casualty or condemnation, or
- if the landlord cannot substantially restore the premises in a reasonable period of time following a casualty or condemnation.
| 111.01B | |
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Requirements
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Material Commercial Lease Type |
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Lease with Property Assessed Clean Energy (PACE) Financing |
You must not approve any Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… that includes PACE financing. |
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Renewable Energy Generation Lease |
You must only approve leases for renewable energy systems that comply with Part II, Chapter 1: Attributes and Characteristics, Section 112: Renewable Energy Generation Systems . |
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Other Material Commercial Leases |
You must only approve other Material Commercial Leases Material Commercial LeasesLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… that comply with Part II, Chapter 1: Attributes and Characteristics, Section 111: Commercial Leases . |
| 111.01C | |
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Requirements
As you review each Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… modification, you must consider if it:
- violates any of the requirements of this Section;
- contains terms that are inconsistent with the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 ; or
- presents risks that are inappropriate for the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 .
If any of these conditions are present you must:
- require the Borrower BorrowerPerson who is the obligor per the Note. to modify the Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… appropriately; or
- address the items in the Tenant Estoppel Certificate ( Form 6413 ) and/or the Subordination, Non-Disturbance, and Attornment Agreement ( Form 6415 ).
| 111.01D | |
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Requirements
You must obtain a Tenant Estoppel Certificate ( Form 6413 ) for each Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… .
Requirements
You must use Form 6415 if:
- the Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… contains provisions for the Borrower BorrowerPerson who is the obligor per the Note. to assume liability or other risks as landlord that would be unacceptable to the Lender LenderPerson Fannie Mae approved to sell or service Mortgage Loans. in case of a Foreclosure Event Foreclosure EventAny of the following: Foreclosure per the Security Instrument; Fannie Mae's exercise of rights and remedies per the Security Instrument or applicable law (including Insolvency Laws) as holder of the Mortgage Loan and/or the Security Instrument, where Fannie Mae (or its designee or nominee),… ; or
- the form
- is necessary for subordination and attornment, or
- would otherwise be beneficial.
You must ensure that each Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… (including any renewal or extension):
- is subordinate to the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. ; and
- requires the tenant to attorn to the Lender LenderPerson Fannie Mae approved to sell or service Mortgage Loans. under the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 .
Requirements
You must make reasonable efforts to get a Form 6413 for each non-Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… , other than leases relating only to equipment or maintenance services.
If a non-Material Commercial Lease Material Commercial LeaseLease, sublease, license, concession, grant, or other possessory interest for commercial purposes comprising 5% or more of the Property's annual EGI, or relating to: solar power, thermal power generation, or co-power generation, or the installation of solar panels or any other… has terms that are inconsistent with the terms of the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 or present inappropriate risks for the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 , then you must:
Requirements
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Non-Material Commercial Lease Type |
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Telecommunications and Cell Tower Leases |
You must review any telecommunications and cell tower lease to ensure it does not:
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| Communications Service Agreement |
You do not need to subordinate the service agreement to the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. if:
If a communications service agreement is accompanied by a lease or easement, then the lease or easement must end automatically when the service agreement expires, unless the service agreement is subordinated to the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. . |
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Mineral Rights; Oil and Natural Gas Leases |
You must review each agreement or lease of mineral rights or rights relating to subsurface oil and natural gas to ensure that it does not:
The Borrower BorrowerPerson who is the obligor per the Note. must execute Form 6262 if a lease or deed reservation of rights allows for the subsurface exploration of oil, natural gas, or minerals, but no evidence of active or planned exploration or drilling exists on the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). . |
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Laundry Lease |
You do not need to subordinate the lease to the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. if you confirm that the lease:
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Equipment or Related Maintenance Services Lease |
You must ensure that the lease:
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Guidance
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Non-Material Commercial Lease Type |
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Storage Unit Lease |
You do not need to subordinate the lease to the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. if you determine the unit is being leased pursuant to a residential Lease LeaseWritten agreement between an owner and the tenant of a Property stipulating the conditions for possession and use of real estate for a specified period of time and rent. . |
| 111.03 | |
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Requirements
You must ensure that:
- the residential nature of any Property
PropertyMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
with units available for STR
STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer…
is maintained, even though any Lease
LeaseWritten agreement between an owner and the tenant of a Property stipulating the conditions for possession and use of real estate for a specified period of time and rent.
of an STR
STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer…
unit will be
- classified as a commercial lease, and
- subject to the space and income limitations per Form 4660 ;
- no more than 5% of the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). units (not counting recreational vehicle sites) are available for STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… ; and
- the Underwritten NCF NCFAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. accurately incorporates all STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… income.
You must include the following information in your underwriting analysis:
- Borrower's Borrower'sPerson who is the obligor per the Note. strategy for implementing STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… ;
- a description of the STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… arrangement;
- length of time the STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… has been in place;
- Borrower's
Borrower'sPerson who is the obligor per the Note.
action plan for handling liability issues for
- STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… tenants at the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , and
- safety concerns for non-STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… tenants;
- if the STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… units are furnished or unfurnished; and
- confirmation that the
- STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… is legally permissible and in compliance with applicable laws and zoning,
- Borrower's Borrower'sPerson who is the obligor per the Note. or master tenant’s insurance covers any STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… , and
- Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is residential in nature (i.e., not operated as a hotel or other single room occupancy arrangement).
Guidance
Examples of an STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… arrangement include an arrangement between the Borrower BorrowerPerson who is the obligor per the Note. and:
- a tenant/master tenant, where the tenant/master tenant has an agreement with an STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… provider or platform (such as Airbnb, VRBO®, etc.); or
- an STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… provider or platform, where the Borrower's Borrower'sPerson who is the obligor per the Note. tenants may make their units available for STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… .
You should seek to establish a leasing history of at least 12 months for any STR STRProperty permitting leases or master leases (including subleases, licenses, and other possessory interests, whether oral or written) of an individual dwelling unit where the intended occupancy of the unit is for less than 30 days, regardless of the stated lease term, such as through a peer-to-peer… unit.
| Section 112 | |
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Requirements
Any operational renewable energy generation system benefitting the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). or the Borrower BorrowerPerson who is the obligor per the Note. must be:
- located on the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ;
- comprised of a Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… ;
- Borrower BorrowerPerson who is the obligor per the Note. -owned; and
- installed, or installation will begin, on or before the Mortgage Loan Origination Date Mortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. .
| 112.02 | |
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Requirements
For any Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). with an acceptable Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… , you must ensure:
- All equipment, including energy storage, is located on the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). and owned by the Borrower BorrowerPerson who is the obligor per the Note. .
- The Borrower
BorrowerPerson who is the obligor per the Note.
has all required permits, licenses, and certificates to comply with all utility tariffs and laws governing the
- generation,
- storage,
- transmission, and
- distribution of electricity.
- The Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). will remain connected to the utility grid even if the Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… output is sufficient for all of the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). energy needs.
- The Borrower BorrowerPerson who is the obligor per the Note. will not be characterized or regulated as a public utility.
- Any power generated from the Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… that is not consumed or stored on-site is only sold to the local utility, not to any other third party.
- Any battery storage system is designed only for on-site uses (e.g., peak shaving), and the Borrower BorrowerPerson who is the obligor per the Note. has not arranged for ancillary services with any utility or third party.
- The Borrower BorrowerPerson who is the obligor per the Note. executes Modifications to Multifamily Loan and Security Agreement (Mortgage Loan with installed Solar Photovoltaic System) ( Form 6270 ).
Guidance
You should engage legal counsel with solar photovoltaic system experience and state-specific knowledge to review all applicable local laws, contracts, and agreements regarding the Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… installation and operation, including:
- the interconnection agreement with local distribution company or utility;
- any net metering agreements;
- engineering, procurement, and construction contracts or agreements;
- any Operating and Maintenance Agreements;
- notice of Permission to Operate (or similar document) provided by local distribution company or utility;
- any supplemental financing or financing incentives (e.g., grants, tax credits, etc.) used by the Borrower BorrowerPerson who is the obligor per the Note. to finance the Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… to determine if any competing liens or other restrictions might result;
- any leases or contractual arrangements, such as agreements for
- renewable energy certificates,
- solar renewable energy certificates, or
- purchasing power; and
- confirming that Borrower BorrowerPerson who is the obligor per the Note. will not be deemed a public utility.
| 112.03 | |
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Requirements
The PCA PCAAssessment of the Property's physical condition and historical operation. must include an evaluation of the Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… equipment and roofs/structures where the equipment is mounted per the Solar PV Module of Form 4099 .
| 112.04 | |
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Requirements
When calculating Underwritten NCF NCFAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. :
- do not include any income derived from the Solar PV System Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored… , except for tenant utility reimbursement;
- any utility reimbursement income must
- not exceed the trailing 12-month period, and
- consider any decrease from the lower utility expense;
- utility expense must be supported by the trailing 12-month operating history; and
- include all additional Solar PV System
Solar PV SystemA renewable energy system located on the Property that converts sunlight into electricity and/or a battery storage system containing lithium ion batteries or equivalent technology capable of storing electricity received from the electric grid or a renewable energy system and delivering stored…
operating expenses such as:
- operating and maintenance contract fees;
- fixed utility fees;
- incremental real estate taxes;
- insurance coverage; and
- Replacement Reserves Replacement ReservesCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. for equipment replacement and/or system removal and reinstallation upon roof replacement.
| Section 113 | |
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| 113.01 | |
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Requirements
You must ensure the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has no evidence of any surface entry related to active mineral, oil, or gas activities.
For Properties PropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). with mineral, oil, or gas exploration on an adjacent property, you must:
- Identify whether the exploration is active or inactive.
- Deliver DeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. a Phase I ESA Phase I ESAEnvironmental Site Assessment conducted per the current ASTM E-1527 standard and the resulting report. for the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). reporting no Recognized Environmental Conditions.
- Confirm all mineral, oil, or gas:
- equipment is located more than 600 feet from any Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). boundary line; and
- exploration on the adjacent property does not impact the health or safety of the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). tenants or have a material adverse impact to its marketability.
- Confirm:
- the adjacent property is not owned by an Affiliate AffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… of the Borrower BorrowerPerson who is the obligor per the Note. ; and
- either:
- no history of spills or leaks exists; or
- if spills or leaks have occurred, all applicable permits are in place.
Guidance
Evidence of active mineral, oil, or gas activities on the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). may include:
- wells associated with production, exploration, or extraction;
- active storage or processing; or
- associated pits, ponds, or lagoons.
| 113.02 | |
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Requirements
You must ensure the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). has no evidence of inactive mineral, oil, or gas equipment, unless:
- the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). Phase I ESA Phase I ESAEnvironmental Site Assessment conducted per the current ASTM E-1527 standard and the resulting report. is acceptable;
- if the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is subject to an oil and gas lease, the lease complies with Part II, Chapter 1: Attributes and Characteristics, Section 111.02B: Non-Material Commercial Lease Types ; and
- for a refinance, all mineral, oil, or gas equipment has been removed, capped, and closed per regulatory requirements before closing, and you have a permit or closure letter from the governing authority; or
- for an Acquisition
AcquisitionAny Purchase of either the:
Property’s fee simple or leasehold interest via a deed transfer; or
Controlling Interest in the Borrower.
, you:
- require the mineral, oil, or gas equipment/wells to be removed, capped, and closed per regulatory requirements within 180 days after the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 closing;
- escrow the applicable cost to remove equipment, close wells, and remediate the site per regulatory requirements;
- receive a permit or closure letter from the governing authority; and
- modify the Environmental Indemnity Agreement as required by Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! .
| Section 114 | |
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| 114.01 | |
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Requirements
You must confirm the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). management team or company:
- manages other assets in the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). same geographic area; and
- has adequate staffing and expertise
- managing similar
- multifamily assets, and
- regulatory restrictions, and
- to ensure effective
- administration,
- leasing,
- marketing, and
- maintenance.
- managing similar
Guidance
An independent, professional Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). management company is not required.
Requirements
If the Borrower BorrowerPerson who is the obligor per the Note. is not the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). manager, you must ensure the:
- Borrower BorrowerPerson who is the obligor per the Note. has a written management agreement with a Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). management company allowing Lender LenderPerson Fannie Mae approved to sell or service Mortgage Loans. cancellation without penalty or prior notice in case of a Borrower BorrowerPerson who is the obligor per the Note. default per the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; or
- Borrower BorrowerPerson who is the obligor per the Note. and Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). manager complete the Assignment of Management Agreement ( Form 6405 ).
Guidance
You should ensure the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). management agreement clearly states the
- Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). manager's responsibilities, and
- amount of the management fee (or fee determination methodology).