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RED OAK Field Services

FNMA Commercial Rating Definitions

Red Oak follows the Fannie Mae property condition ratings for our FNMA/Multifamily Site Inspections. You should familiarize yourself with these definitions and keep a copy of these instructions with you while performing this type of inspection to avoid getting a deal returned to you within the Inspection Tree. Individual system and overall property condition should be measured based upon observed conditions at the time of assessment. While characteristics from multiple categories may apply, the ratings are intended to be a representative evaluation of the system as a whole.

    Please See MBA Rating Guide  for more info on those guidelines.

   FNMA Rating Definitions

 1 – No substantial concerns observed. No further action required.
Life Safety:  No issues observed. 
Deferred Maintenance: No observable or reported signs of deferred maintenance. �
Routine Maintenance:  Superior practices that appear to be extending the useful lifeof the system or its components.
Remaining Useful Life:  Will exceed the end of the loan term by more than 10 years due to high quality of materials and/or maintenance practices.  


 2 – Some minor issues noted. Limited follow-up required.
Life Safety:  No issues or minor issues observed.
Deferred Maintenance:  Isolated minor items that can be addressed by in-house maintenance at limited expense. 
Routine Maintenance:   Practices appear to be addressing issues on a proactive basis ensuring good performance. 
Remaining Useful Life:  Will exceed the end of the loan term by at least 3 years due to quality of materials and/or maintenance practices.
 3 –Substantial and/or critical issues noted. Documented follow-up required.
Life Safety:  Some issues observed that require immediate attention; however do notrequire capital expenditures.
Deferred Maintenance:   Concerns cannot be addressed by in-house maintenance staff; and do appear to materially affect the replacement reserves. 
Routine Maintenance:  Appear to be a combination of proactive and reactive practices, with some limited number of components requiring attention.
Remaining Useful Life:  Between 3 and 5 years. Quality of materials and maintenance is below average.
 4 – Overall showing signs of deterioration. Documented follow-up with possible action plan required.
Life Safety:  Issues observed that require immediate attention and capital expenditures. 
Deferred Maintenance:  Issues affecting one major system and/or several components of different systems that will materially affect capital improvement expenditures within the next 12 months. 
Routine Maintenance:   Practices appear to be reactive and are not addressing condition concerns in a timely manner.
Remaining Useful Life: Less than 3 years.  Quality of materials is substandard, system has exceeded its estimated useful life,  and/or materials are poorly maintained. 
 5 – Severe deferred maintenance observed. Follow-up and substantial action plan required.
Life Safety:  Significant issuesobserved that will require expenditures beyond what is provided for in thereplacement reserve. 
Deferred Maintenance:  Excessive deferredmaintenance at multiple systems and/or components that will materiallyaffect capital improvement expenditures on an immediate basis. 
Routine Maintenance:  Inadequate practicesthat do not address on-going maintenance to ensure maintenance and functionality of the system. 
Remaining Useful Life:  Has been exceeded.Quality of original materials is poor, system has exceeded itsestimated useful life by a significant margin, and maintenance is poor.