How Are Freddie, Fannie and HUD Responding to New Seismic Standards?
ASTM recently implemented changes to its standard for assessing seismic risk to buildings, which will impact both cost and turnaround times to perform seismic risk assessments. How are Freddie Mac, Fannie Mae and HUD adopting these changes?
By
Bill Tryon |
Partner Engineering & Science, Inc. |
|
Updated on August 23, 2016
X
Thank you for sharing!
Your article was successfully shared with the contacts you provided.
ASTM International recently updated the E2026 Standard Guide and E2557 Standard Practice , the industry standards for assessing seismic risk to buildings. Updates to E2557 make some parts of the 2026 Guide mandatory, require a more detailed review of drawings for many assessments, and, in many cases, will require site observations to be completed by a licensed engineer who satisfies specific experience requirements detailed in the revised standard. The key motivation behind the update was increased quality and consistency of reports. However, some of these changes will also increase the time and cost to complete reports, and will require borrowers to provide site access to yet another consultant for evaluation of the collateral. Importantly, while the new standards more narrowly identify criteria for the evaluation of seismic risks, adoption is not mandatory and customization of scope remains an option. It is still possible to perform assessments to the old standard, though development of a customized scope of work might be a better long term option (for more, see here ). How have agency lenders chosen to respond to the new E2026-16a Standard Guide and E2557-16a Standard Practice ? How Have Standards Been Adopted Across the Agency Space? In addition to impacts to cost, ASTM’s requirement for an engineer with seismic experience to visit properties has limited the pool of qualified assessors, resulting in longer turn-around times for Probable Maximum Loss studies performed under the new standards. Since HUD already requires a more detailed seismic evaluation under ASCE 41-13, their requirements have not been impacted. Fannie Mae and Freddie Mac are planning revisions to address the new requirements. Until then, Freddie Mac has advised that their own requirements for the qualifications of the field assessor will remain in effect. Fannie Mae has indicated that they will continue to accept reports prepared in accordance with prior standards ( E2557-07 ) until officially revised requirements are published. Based on recent conversations, Fannie Mae also appears likely to allow for less stringent requirements for site reconnaissance. The new agency seismic landscape Of course, the broader seismic risk landscape has changed significantly in the last year or so. Freddie Mac and Fannie Mae both previously updated their seismic policies (see here and here ). In addition to that, new seismic retrofit regulations have been introduced and the USGS recently included man-made earthquakes on their seismic hazard map . We recently hosted an in-depth webinar on how these changes impact lenders and investors, which is available on demand until the end of September. Click here to watch it today!
Want to continue reading? Become a Free ALM Digital Reader.
Once you are an ALM digital member, you’ll receive:
Unlimited access to GlobeSt and other free ALM publications
Access to 15 years of GlobeSt archives
Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
1 free article* every 30 days across the ALM subscription network
Exclusive discounts on ALM events and publications
*May exclude premium content
Already have an account? Sign In Now
In today’s rapidly changing real estate landscape, staying ahead means understanding what’s next. Discover key strategies and emerging trends driving the future of corporate real estate.
Transform your lease administration. Download this eBook to discover five essential tips that will help you streamline processes, reduce risks, and maximize efficiency.
Join this on-demand webinar to explore best practices in real estate lease administration. Learn how to streamline your operations and achieve cost savings while ensuring compliance with lease accounting standards.
Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!
Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
Exclusive discounts on ALM and GlobeSt events.
Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.