Back in October, Freddie Mac announced that Conventional and Target Affordable (TAH) loans with a balance under $15 million (not SBL) will now qualify under the “FRED” program. For you anagram aficionados, FRED stands for Fast, Reliable, Easy Decisions. The FRED program also applies to supplemental loans with an unpaid balance plus supplemental balance under $20 million. Seniors, Student and Manufactured Housing are included in this program, except for those which are Moderate Rehab, Lease-up, Value Add and Forward Commitments.
This program requires that a “Physical Risk Report” be prepared and delivered via a recently released and updated Form 1108. The Physical Risk report is an abbreviated physical risk evaluation combined with an environmental transaction screen and an evaluation of business environmental risks. It is similar to the evaluations required for the Freddie Mac Small Balance Loan (SBL) program, with a few additions.
GRS Group is well positioned to provide this work. We are a leader in providing assessments to Seller/Servicers for Conventional, Affordable, Multifamily, Seniors, Student and Manufactured Homes and we have prepared over 1,800 projects under the Freddie Mac SBL program since 2015.
What is included in a “Physical Risk Report”?
- Inspection by a consultant meeting Freddie Mac’s Property Condition Assessment required credentials
- The Property inspection is the same as required on a full Property Condition Assessment; however, only one individual needs to inspect the property. There is not a separate Environmental Professional inspecting the Property.
- Research into municipal records regarding violations
- Identification of Critical, Priority, PR-90, Operational Repairs and Reserve Schedule (for loan term plus 2 years)
- Calculation of Peak Ground Acceleration and evaluation of seismic risk factors
- Environmental Transaction Screen, inclusive of a regulatory database report
- Evaluation of asbestos-containing materials present or suspected at the site
- Radon testing using the same protocols as required for a Freddie Mac Phase I ESA
- Completed Report on Form 1108 form presented in Excel and in PDF (with attachments)
GRS Group is prepared to support your FRED program transactions with timely and thorough reporting!
About GRS Group:
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.
Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance. We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies and delivering customized solutions to assist our clients in achieving their investment goals.