Yesterday morning Freddie Mac announced it updated its Seller / Servicer guide to incorporate the most current ASTM Standard Guide E2026-16a and ASTM Standard Practice E2557-16a. Effective immediately, all engagements requiring a Seismic Risk Assessments made through their conventional and Small Balance Loan (SBL) financing programs must adhere to the recently updated ASTM standard.
As of right now, Fannie Mae continues to allow reports to follow its existing scope of work, but is currently in the process of revising their guide.
The Immediate Impact of the Changes
Freddie Mac’s new guide now follows ASTM’s more restrictive requirements for who can conduct or review Seismic Risk Assessments. Details of the specific assessor requirements in ASTM Standard Guide E2026-16a and ASTM Standard Practice E2557-16a are described here. Importantly, this change will put added strain on the pool of qualified professionals available to complete the assessments and may create a backlog for consultants. We suggest that you reach out to your consultant now to determine how this increased demand may increase report turn-around-times and / or pricing.
Partner’s seismic team has been aggressively preparing since the roll-out of the new ASTM standards earlier this year to prepare for Freddie Mac and most likely soon, Fannie Mae’s imminent implementation of the new requirements. Our reports have been updated, and we have a strong team in place that is qualified to perform this work immediately. Please reach out to me if you have questions about how the adoption of the latest ASTM standard may impact your Freddie Mac deals.
Managing Seismic Risk Today
Freddie Mac’s announcement is the latest occurrence in a rapidly changing Commercial Real Estate seismic risk environment. ASTM updated its guidelines this summer to improve the consistency of the evaluation of seismic risks during CRE transactions across the industry. The enforcement of several sweeping mandatory seismic retrofit ordinances, and a recent determination by the USGS concerning the risk of man-made earthquakes have further impacted the current seismic risk landscape.
Now is a good time to reevaluate your approach to seismic risk assessments and due diligence. For more information on the ASTM standards and other changes in the seismic space, please watch our recent webinar in partnership with GlobeSt.com – click here.