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August 29, 2017

Fannie Mae Takes Important Step to Align Agency Seismic Requirements

By Drew McCreery

FANNIE MAE HAS JUST UPDATED ITS GUIDANCE RELATED TO SEISMIC RISK ANALYSIS. THE NEW GUIDE NOW REFERENCES THE ASTM GUIDES E2026-16A STANDARD GUIDE FOR…

Fannie Mae has just updated its guidance related to seismic risk analysis. The new guide now references the ASTM guides E2026-16a Standard Guide for Seismic Risk Assessment of Buildings and  ASTM E2557-16a Standard Practice for Probable Maximum Loss (PML) Evaluations for Earthquake Due-Diligence Assessments. Prior to this update, Fannie Mae’s requirements did not explicitly mention ASTM standards for Seismic Risk Assessment.

The formal adoption of the ASTM standards into their guidance is an important step to achieving consistency across the industry. Per the new guide, Fannie Mae’s Seismic Risk Assessment will become more in line with the determinate factors of Freddie Mac making these reports more consistent.

What Are the Specific Changes?

  • Firstly, Fannie Mae had previously defined Probable Maximum Loss (PML) as Scenario Expected Loss (SEL), but this was not in writing. The current revision makes this official. The Scenario Upper Loss (SUL), building stability and site stability must also be reported under the new requirements.
  • Secondly, guidance on “triggers” (see below) was changed. Fannie Mae now requires a Seismic Risk Analysis (SRA) report if the Peak Ground Acceleration (PGA) based on the 10% in 50-year exceedance probability (the 475-year return period) is greater than or equal to 0.15g and if one or more of the triggers discussed below is found on the property.

Continue reading the GlobeSt blog here.

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