Fannie Mae may require which type of environmental assessments?

Fannie Mae may require which type of environmental assessments?

• A. Phase II only
• B. Phase I only
• C. Phase III
• D. Phase I and Phase II

Answer: (D)

Environmental due diligence for a mortgage typically starts with a Phase I Environmental Site Assessment to screen for potential concerns without disturbing the site. If Phase I reveals potential issues, a Phase II ESA is conducted to collect samples and confirm whether contamination is present and its extent. Phase III involves remediation actions, not an initial assessment, so it isn’t the step used for underwriting unless cleanup is already needed. Because a lender may require Phase I to identify issues and, if issues are found, Phase II to assess them, the scenario that best fits is Phase I and Phase II.

Environmental due diligence for a mortgage typically starts with a Phase I Environmental Site Assessment to screen for potential concerns without disturbing the site. If Phase I reveals potential issues, a Phase II ESA is conducted to collect samples and confirm whether contamination is present and its extent. Phase III involves remediation actions, not an initial assessment, so it isn’t the step used for underwriting unless cleanup is already needed. Because a lender may require Phase I to identify issues and, if issues are found, Phase II to assess them, the scenario that best fits is Phase I and Phase II.