On May 22, Fannie Mae (FNMA) released an update to its 4099 guide, with changes to requirements for High Performance Building reports. New requirements take effect for assessments engaged on or after May 22, 2017. This update brings good news to lenders and consultants, with some process refinement and quicker turns.
What this means for lenders
Delegated Underwriting and Servicing (DUS) lenders are now required to review and score High Performance Building reports. A score between 1 and 3 will be given based on required edits to the report: a score of 1 (no changes), 2 (minor changes), or 3 (major changes). When using a pre-qualified vendor, lenders will review and score reports without sending to FNMA for additional review. This change is intended to speed up the rate-lock process and should be considered good news for lenders.
What this means for consultants
To be pre-qualified, consultants must submit five reports that receive a score of 1 under the new guidelines.
Additionally, there are some field data collection guidelines that have been updated:
- Sampling requirements have been reduced to the guidelines in the table below.
- Fannie Mae now requires testing of water fixture and toilet flow rates. Domestic hot water temperatures will need to be tested as well. Field assessors will need to plan to accommodate this additional data gathering.
Fannie Mae clarified requirements for tenant data and is implementing the requirement that all property benchmarks be shared with them through Portfolio Manager once the benchmark is complete.
FNMA has an updated 4099H Excel tool that includes water calculations, more uniform entries, and quality checks. The goal is to assist lenders with their reviews, especially around water calculations, which is a popular area for savings.
The Green Rewards program has far exceeded anyone’s expectations, especially Fannie’s. In 2016, FNMA delivered $3.6 billion in green bonds through the Green Rewards program (>$55 billion in acquisitions). The first half of 2017 has already exceeded $5 billion. In the process, consultants have projected billions of gallons of water savings, as well as huge reductions in electricity and natural gas usage. These successes all address FNMA’s goal to have a positive, measurable impact on the financial, social, and environmental bottom line for multifamily borrowers.
Fannie Mae recently announced a change to its Green Building Certifications program. Properties with green certifications can qualify for a price break on a tiered structure, depending on the certification. Certifications that require a reduction in energy to qualify, such as LEED for existing buildings, get a higher price break than certifications, such as Green Globes, that qualify a building without recommended energy and water efficiency measures (EWEMs). Overall, the price break is reduced for the green certification path. The reasoning behind this is that these deals are not exempt from the Federal Housing Finance Agency (FHFA) Multifamily Volume Cap, while properties that go through the Green Rewards program are.
Energy Project Manager
Nova Consulting Group, Inc.