For the past few years, Fannie Mae, Freddie Mac and the Federal Housing Finance Agency have investigated suspect fraudulent deals. After the great financial crisis, several regulations were implemented to increase the number of checks for residential mortgage loans, but multifamily lenders were not subject to these provisions. This loophole in multifamily regulations resulted in manipulated financial statements and fake deals that turned into a commercial mortgage fraud scandal.
In May 2025, as part of its continuing commitment to protecting Delegated Underwriting and Servicing lenders from fraud, Fannie Mae released Title and Closing Requirements for Multifamily Mortgage Loans Form 4650, impacting the setup of all future closings. All new loans under application on or after May 8, 2025, should meet those requirements.
Fannie Mae also released an Approved Title Insurance Underwriter Schedule naming the Title Insurance Underwriters from which Fannie Mae will accept a loan policy (Form 4650.A).
Furthermore, Fannie Mae requires the approved underwriter to draft the Settlement Statement, hold all escrow funds, disburse funds according to the Settlement Statement and closing instructions letter, and prepare and maintain the Receipts and Disbursements Ledger(s).
A Chain of Title Schedule must also be included with the title commitment or provided separately to the lender. The latter must review the Chain of Title Schedule to identify any suspicious previous property transfer, any dramatic increase in value, and, for refinances, to confirm that the apparent control of the property over the prior three years is as underwritten.
While these rules are intended to reinforce underwriting quality and long-term loan performance, they will also require substantial operational adjustments.
