Fannie Mae Updates Multifamily Guide for Property Condition Assessments

Update Requires Certain Obsolete, Unsafe Electrical Panels Be Recommended for Immediate Replacement

By Kevin Finn, Technical Director of Agency Services, and Drew McCreery, Managing Director of Multifamily

Fannie Mae recently issued updated guidance regarding problematic materials that could significantly impact the results and findings within a Fannie Mae Scope Property Condition Assessment (PCA).

Updated PCA Guidance

Effective February 13, 2025, the following electrical panels must be recommended for replacement as an immediate repair:

1. Zinsco or GTE-Sylvania Panels;
2. Challenger Electrical Panels;
3. Bulldog and ITE-Pushmatic Circuit Breakers and Electrical Panels and
4. Federal Pacific Stab-Lok Circuit Breaker Panels

Panel Safety Concerns

Note that this is a shift in Fannie Mae policy and does not reflect a change in status of the panels, which have long been recognized as potentially hazardous. Below is a brief overview of the safety concerns associated with these panels:

• Zinsco or GTE-Sylvania Panels were commonly installed between the 1950s and 1980s, with GTE-Sylvania taking over Zinsco in 1973. They are prone to arcing and failure of the circuit breakers to trip properly when overcurrent occurs, causing increased risk of electrical fires. Furthermore, the breaker contacts in Zinsco panels are found to deteriorate and lose their ability to trip during an overload or short circuit. This issue makes it more likely that the panel would fail to protect the wiring from electrical overloads or faults, creating significant safety risks.
• Challenger Electrical Panels were widely used from the 1970s through the 1980s. Challenger panels have similar issues to Zinsco panels, such as breakers that can fail to trip properly under overload conditions and/or overheating, increasing the risk of fire. Additionally, Challenger panels are sometimes found to have poor connections within the panel that could lead to electrical faults and arcing.
• Bulldog & ITE-Pushmatic Circuit Breakers and Electrical Panels were used from the 1940s through the 1980s.They have been linked to several safety concerns over time, especially regarding their inability to trip properly during an overload or short circuit. The contacts inside these breakers are known to corrode and fail under load, increasing the chances of electrical hazards.
• Federal Pacific Stab-Lok Circuit Breaker Panels were installed between 1950-1990. Field and lab testing on Stab-Lok circuit breaker panels established that the panels and breakers have a significant failure rate. The panels contain breakers that do not trip and therefore do not adequately prevent electrical overloads. These panels are also not United Laboratories (UL) rated and therefore, are not code compliant.

Because they fail to meet current electrical standards and are considered obsolete, many of these panels have already been replaced. However, if any of these panels are identified during field observation, replacement must be included in the immediate repair table. Replacement costs can vary depending on considerations such as wiring, installation, and complexity of retrofit.

This guidance does not affect reports initiated prior to February 13; however, any reports that were completed prior to this date but remain open may require updating to the current requirements. Lenders may want to consult with Fannie Mae for clarification.

For updated guidance, refer to the Fannie Mae Multifamily Guide including Notification 25-02R and updated Form 4099.G, dated February 13, 2025.