Fannie Mae DUS | 2026-10-28

Fannie Mae Ground-Lease Closings Need Four Separate Controls

The current Guide requires a leasehold lien, Ground Lease Review Checklist, Ground Lessor Estoppel, and funded ground-rent escrow.

Fannie Mae's current Multifamily Guide requires the mortgage-loan collateral for a ground-leased property to include a lien on the leasehold estate. The lender must also ensure the ground lease complies with the Ground Lease Review Checklist, Form 6479, unless the ground lessor joins in the Security Instrument and grants a lien on the fee estate, or the absence of the leasehold estate would not materially and adversely affect the property's operation or value.

Ground rent is a separate control. The Guide requires the lender to establish an escrow for ground rents, ensure the borrower deposits sufficient funds, and make all payments due under the ground lease. It also requires ground-lease bonus rent and escalations during the mortgage-loan term to be considered in calculating underwritten net cash flow and analyzing refinance risk.

The lender must obtain an executed Ground Lessor Estoppel Certificate, Form 6495. It must also review and analyze the ground lease for Guide compliance and retain the completed Form 6479 in the Servicing File. Those are distinct deliverables: the estoppel confirms the lessor-side facts and positions captured in the form, while the checklist documents the lender's broader lease review.

For borrower-side counsel, one ground-lease tracker should identify the original lease and every amendment, the remaining term and renewal options, base and additional rent, escalation dates, payment and escrow mechanics, notice and cure rights, mortgagee protections, the leasehold-lien documents, Form 6479 comments, and Form 6495 execution status. Reconcile that tracker with title, underwriting, and the loan documents before closing rather than treating the estoppel as the entire diligence package. This note is informational only and is not legal advice for any specific transaction.