On May 31st , 2011 Freddie Mac updated their requirements for Phase I ESA environmental reports.
The most significant of Freddie Mac’s environmental report updates is a requirement to indicate in the Phase I ESA whether the state in which the property is located has a State Super Lien Law. Super Liens would allow environmental authorities to place a first priority lien on the Property as a result of environmental hazards. Numerous states currently have Super Lien laws in effect, including Connecticut, Hawaii, Louisiana, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, and Wisconsin.
Another Freddie Mac ESA revision is a clarification that the opinion that a Property contains no asbestos-containing materials (ACM) cannot be based on the Property’s construction date. Freddie Mac requires that the consultant either render a professional opinion on whether the building contains asbestos, that opinion not being based solely on the age of the building, or conduct sampling of suspect ACM. In lieu of conducting sampling, an O&M Plan may be recommended if the material is:
- Undamaged non-friable; and
- Non-hazardous in its current form, condition and location.
An abbreviated O&M plan is allowed for undamaged, encapsulated friable joint compound, if that is the only suspect material. If sampling is conducted, a qualified professional must analyze the samples utilizing polarized light microscopy and dispersion staining.
Other revisions include:
- The minimum number of units to be inspected and/or sampled
- Requires that Freddie Mac approves O&M plans prior to the loan origination date
- Clarifying the inspection requirements for PCBs
- Revisions to form 1103
Visit our Freddie Mac due diligence webpage for a full rundown of the revisions.
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