Answering the agencies thoroughly and completely could force lenders to decline a mortgage application. Periodically, changes are made to Fannie's underwriting guidelines and their automated underwriting software. She said residential units in 400 buildings in Florida have been deemed ineligible by Fannie Mae for loans. Director, Single-Family Collateral Risk. Fannie Mae's Condo Project Manager (CPM ) is a free, web-based tool that enables lenders to quickly and easily certify a condominium project (or a legal phase of a project). When CPM is used as part of the project review, the lender . The opposite is happening as clearly Fannie Mae wants to limit their exposure to condos in their portfolio. The Eligibility Matrix provides the comprehensive LTV, CLTV, and HCLTV ratio requirements for conventional first mortgage loans eligible for delivery to Fannie Mae. But thus far, the ripple effect on condo transactions has been minimal around the state, said Christina Pappas, the new president of the Florida Realtors, an industry trade group. The fallout keeps coming from last summer's condominium collapse in Surfside, Florida. That a 10-acre complex is one of nearly 1,000 "unavailable" condo projects nationwide. Mae has approved through Final Project Approval through PERS, or (ii) the Seller has approved as a Fannie Mae "Full Review" submitted to Fannie Mae's Condo Project Manager (CPM)* and received a project acceptance certification, if the mortgage complies with the requirements below as of the settlement date: The project complies . Using an appraisal waiver does not exempt the lender from completing the required project review. the insurer meets Fannie Mae's rating requirements as specified in B7-3-01, Property . the terms and amount of coverage are at least equal to that provided under an NFIP policy based on a review of the full policy issued by a private insurer, and. To determine whether the project meets these requirements, a number of project review methods are available. These new regulations will have wide-ranging impact. To further emphasize its point, Fannie Mae subsequently issued an "unavailable" list of more than 950 condominium projects across the US now deemed ineligible for government-backed loans given . Lenders rely on Fannie Mae and Freddie Mac to purchase or guarantee their (See B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates; and B4-2.3-04, Loan Eligibility for Co-op Share Loans, for additional information.) Regardless of review type, projects must comply with all policies described in the Selling Guide, B4-2.1-03, Ineligible Projects, including when completing a Limited Review or an appraisal waiver is used. When CPM is used as part of the project review, the lender . Significant Deferred Maintenance: Meeting one or more of the following criteria will make condos ineligible: Rent Payment identification on VOA Reports (Added Feb. 17, 2022) Fannie Mae, Lender Letter (LL-2021-14) On October 13, 2021, Fannie Mae issued Lender Letter (LL-2021-14) regarding "Temporary Requirements for Condo and Co-Op Projects.". See all perspectives. Review Requirements See B4-2.2-01, Limited a policy issued by a private insurer as long as. Tighter condo lending requirements from Fannie Mae went into effect on January 1, 2022, nearly 7 months after 98 lives and 136 homes were lost in the Champlain Towers South collapse. a standard policy issued under the NFIP; or. Fannie Mae issued Lender Letter LL-2021-14 to specify temporary eligibility requirements for condominium and co-op projects with 5 or more attached units (collectively "Projects)", regardless of the type of project review or review waiver. Frank Simone, general counsel, KW Property. Condo Ownership Guidelines: 21+ units - No more than 10% can be owned by one person or company 5 - 20 units - two units 2 to 4 units - one unit Getting a Mortgage on a Condominium Most lenders can help you get approved for a condo with a conventional loan. These new requirements may . 202-752-6720. Verification of adequate hazard, flood (if applicable), liability and fidelity bond insurance is required prior to closing. To better understand lenders' views on appraisal modernization, including benefits, implementation challenges, and possible applications, Fannie Mae's Economic & Strategic Research (ESR) Group surveyed senior mortgage executives. Full reviews require a thorough review of a project with complete documentation. On October 13, 2021, Fannie Mae issued Temporary Requirements for Condo and Co-Op Projects, significantly impacting loans secured by units in condominium and co-ops. They include: Information about their locations and identities was not . Ineligible Properties. Since the last changes for Fannie Mae's lenders guidelines in 2011, insuring your condo has been playing a larger role than before for those seeking a mortgage.As of 2016, the latest guidelines from Fannie Mae (which are still intact) state that condo owners need a number of policies in effect to ensure that. Fannie Mae Project Eligibility Review Service (PERS) Ineligible Project Types Must not be a project type that is on the Ineligible Project Types list in B4-2.1-02, Ineligible Projects Insurance Requirements* Compliance with all applicable requirements in B7, Insurance is required (see page 4). Fannie Mae waives a project review for 2-4 unit condo projects, thereby giving no restriction to how many units a single entity can own. Some are small and some are large and impactful. Unsafe Conditions: Condos that have received a directive to make repairs due to unsafe conditions will be ineligible until the repairs are made. Condo buyers beware as they snuck this one in (effective October 20 th ): Step 3: Confirm the Condo Project Insurance Requirements** We will provide guidance for new certifications. During the weekend of March 19, 2022, Fannie Mae implemented an update to Desktop Underwriter (DU) Version 11.0. a policy issued by a private insurer as long as. The guidance goes into effect Feb. 28. Answer: In response to the collapse of the condo building in Surfside, FL last year, Fannie Mae issued new "temporary" lending requirements, effective Jan 1 2022, for Condos and Co-ops to protect against future deferred maintenance issues and, hopefully, incentivize Associations to address issues faster. This regulation requires that 70 percent of the units in a newly constructed building be pre-sold in order for Fannie Mae to . These updates open the door to Fannie Mae financing on many projects that were previously ineligible. "Lenders are responsible for confirming that condo and co-op projects meet Fannie Mae's eligibility requirements," Fannie Mae told the Sun Sentinel. Condominium boards and management companies of condominium buildings should be aware that these new requirements could have a significant impact on condominium owners' ability to sell their units. Title to the property must be held as fee simple, leasehold estate, or as a co-op form of ownership. Investment condos require a 20% down payment. An investigation into the cause of the disaster revealed . Fannie Mae Loan Guidelines and Insurance Requirements for Condo Owners Explained. February 2, 2022 New loan eligibility requirements for units in community associations have been issued by the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") in response to the collapse of Champlain Towers in Florida. Limited Review Eligibility Requirements : The project meets the Requirements Applicable to All Properties in a Condo, Co-op, or PUD Project described in B4-2.1-01, General Information on Project Standards. The LLPAs apply to all loans that meet the stated criteria for the LLPA, unless otherwise noted or excluded. The temporary requirements pertain to: Projects with significant deferred maintenance and unsafe conditions (projects are now ineligible for sale until . Title to the property must be held as fee simple, leasehold estate, or as a co-op form of ownership. WASHINGTON, DC - Fannie Mae (FNMA/OTCQB) today issued additional details about its new RefiNow option, which is available for qualifying homeowners with a Fannie Mae-owned mortgage beginning June 5, 2021. Get Started Step 1: Determine a Condo Project Review Type 5600: Property Eligibility and Appraisal Requirements; 5700: Property; 5800: Uniform Closing Dataset; 5900: Automated Income and Asset Assessment with Loan Product Advisor; 6000 Selling and Delivery. Full Review requirements for units in new and established co-op projects can be found in B4-2.3-02, Co-op Project Eligibility. The new requirements, which went into effect on January 1, 2022, include: Building projects with unsafe conditions that have received orders to conduct repairs from regulatory authorities or inspection agencies will be ineligible for Fannie Mae backed loans until the repairs are completed. The requirements are designed to address a wide range of property types with varying characteristics; however, there may be instances when the unique nature of a particular . a policy issued by a private insurer as long as. 17-Jan-22 - The 2021 high-rise condominium disaster in Florida soon will have an impact in the Windy City. the terms and amount of coverage are at least equal to that provided under an NFIP policy based on a review of the full policy issued by a private insurer, and. the terms and amount of coverage are at least equal to that provided under an NFIP policy based on a review of the full policy issued by a private insurer, and. When financing a unit in a condominium project, the Fannie Mae accepted condominium projects list should be reviewed prior to submitting any project information to the Condominium Department. Fannie Mae's CPM "Unavailable" status is the first place to start when determining condo/co-op eligibility. The problem is the cost to the HOA. Fannie Mae purchases or securitizes mortgage loans secured by units in condo, co-op, and PUD projects that meet Fannie Mae's eligibility requirements. Fannie Mae purchases or securitizes eligible mortgages in all markets across a broad geographic range. Initially announced April 28 by the Federal Housing Finance Agency, RefiNow makes it easier for eligible homeowners earning at or below 80% area median income (AMI) to refinance at a . fannie mae limited condo review . CPM is a Web-based tool designed to help lenders determine if a project meets Fannie Mae's eligibility requirements. Jan. 19, 2022Updated Feb. 17, 2022. I know this post may seem a little boring and "inside baseball", so let me start by saying this is a Really Big Deal. The Selling Guide has been updated to include changes to the following: Refund of Loan-Level Price Adjustments Co-op Project Review Policy Update Project Eligibility Review Service for Established Condo Projects Updates to HomeReady Incorporation of Announcement SEL-2015-11 The complex must be vetted and approved- just like the borrower must be approved in the application process. Buildings in need of critical repairs will be no longer be eligible for Freddie Mac-backed loans. 7klv grfxphqw lv surylghg iru lqirupdwlrqdo sxusrvhv ,q fdvh ri dq\ frqiolfw zlwk wkh surylvlrqv ri wkh )dqqlh 0dh 6hoolqj *xlgh wkh *xlgh uxohv )dqqlh 0dh Condo Project Manager (CPM) Lenders may use Condo Project Manager (CPM) to assist in their Full Review of a project (except for projects containing manufactured homes). The project cannot be an ineligible project in accordance with B4-2.1-03, Ineligible Projects. That a 10-acre complex is one of nearly 1,000 "unavailable" condo projects nationwide. The new loan eligibility requirements set forth by Fannie Mae go into effect on January 1, 2022 and stay in effect until further notice. As of late February, Fannie Mae had compiled a list of more than 1,000 condo associations ineligible for loans. The project is not an ineligible project. According to FHFA, Fannie Mae and Freddie Mac own 62% of conforming loans. Guide, Eligibility Matrix, and your contracts with Fannie Mae to determine loan eligibility. the insurer meets Fannie Mae's rating requirements as specified in B7-3-01, Property . Condo, Co-Op, and PUD Eligibility Originating & Underwriting Condo, Co-Op, and PUD Eligibility Fannie Mae is committed to helping lenders lend with confidence. converted condo projects or units in established projects that do not meet the requirements for a limited review. Our office has begun to receive these . changes to their guidance that mortgage lenders must follow if they want Fannie Mae or Freddie Mac to guarantee or purchase their mortgages. First, loans secured by units in a project with "significant deferred maintenance" or unsafe conditions are ineligible for Fannie Mae loans. (See B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates; and B4-2.3-04, Loan Eligibility for Co-op Share Loans, for additional information.) Both Fannie Mae and Freddie Mac Condominium Guidelines are similar. Pursuant to LL-2021-14, " [l]oans secured by units in condo and co-op projects with significant deferred maintenance or in projects that have received a directive from a . properties that are not readily accessible by roads that meet local standards; units in condo or co-op hotels (see B4-2.1-03, Ineligible Projects ), for additional information; properties that are not secured by real estate such as, houseboats, boat slips, timeshares, and other forms of property that are not real estate . Video. Fannie Mae charges $1,200 for the review, plus $30 for every unit in the buildings, said Tomaselli. The project is not an ineligible project. Limited Review Eligibility Requirements : The project meets the Requirements Applicable to All Properties in a Condo, Co-op, or PUD Project described in B4-2.1-01, General Information on Project Standards. Jan 11, 2021. Fannie Mae and Freddie Mac consider any condominium project ineligible if there is any litigation for the project, not only the unit, "that relates to the safety, structural soundness . The project does not consist of manufactured homes. WASHINGTON -- Getting a mortgage for a resort-area condo might become more difficult after Fannie Mae and Freddie Mac moved to tighten rules on buildings with many short-term rentals and . the terms and amount of coverage are at least equal to that provided under an NFIP policy based on a review of the full policy issued by a private insurer, and. Other One mortgage executive told me Fannie is making the rounds, emphasizing these new condo questions during lender visits. "Lenders are responsible for confirming that condo and co-op projects meet Fannie . The project must be eligible under the Full Review requirements. (See B4-2.1-03, Ineligible Projects). (See B4-2.1-03, Ineligible Projects). a standard policy issued under the NFIP; or. This topic describes Fannie Mae's property eligibility requirements. In October, Fannie Mae issued a notice of new requirements taking effect January 1, 2022, for new loans secured by condominium units. Pricing Guidelines for LLPAs: All LLPAs are calculated based on the acquisition date principal balance and are cumulative. Legacy data will be available to CPM users through Fannie Mae Connect (or users may save their data prior to the platform transition). The Eligibility Matrix also includes credit score, minimum reserve requirements (in months), and maximum debt-to-income ratio requirements for manually underwritten loans. Effective January 1, aging condo buildings in Chicago are under the regulatory microscope of Fannie Mae as a result of the tragic collapse of the Champlain South Tower in Surfside, Florida, which killed 98 people. By Don DeBat. WASHINGTON, DC Fannie Mae (FNM/NYSE) announced today that it is undertaking a comprehensive review of hundreds of condominium projects in the state of Florida in an effort to allow additional projects to become Fannie Mae-eligible through a new "Special Approval" designation. For condo projectsThe condo project must comply with all requirements of the Full Review . To find a list of condominium projects approved by Fannie Mae (FNMA), go to: https://www.fanniemae.com/singlefamily/project-eligibility Realtors Commend New Flexibility. By Anna DeSimone November 3, 2015, Fannie Mae released Selling Guide Announcement SEL-2015-12. . . CPM is a Web-based tool designed to help lenders determine if a project meets Fannie Mae's eligibility requirements. Under this new criteria, borrowers can expect lenders to request detailed disclosures as to the conditions of the building. This new status will appear in the CPM system when Fannie Mae has determined that a specific property is unwarrantable due to not meeting the temporary eligibility requirements or standard eligibility requirements within the Selling . Our ongoing commitment to risk management makes condos a more sustainable and affordable homeownership option for many borrowers. Acceptable Forms of Property Ownership. This includes commercial space that is above and below grade. She said residential units in 400 buildings in Florida have been deemed ineligible by Fannie Mae for loans. Freddie Mac, however, says a single entity can only own one . If you'd like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. The project does not consist of manufactured homes. Justin Alexander. Fannie Mae requires that no more than 35% of a condo or co-op project or 35% of the building in which the project is located be commercial space or allocated to mixed-use. 6100: Cash Program; 6200: Guarantor and MultiLender Swap Programs; 6300: Delivery of All Mortgages; Acceptable Forms of Property Ownership. Fannie Mae's Key Requirements for Condos in 2022 . Second-home condos require a 10% down payment. Quickly and easily determine if a condo project meets Fannie Mae's requirements. I will highlight some of the key . By Vanessa Pena, Esq. See all Fannie Mae Approved Condo requirements on the Fannie Mae website. Documents generally required for full reviews: The changes in this release apply to DU Version 11.0 loan casefiles submitted or resubmitted on or after the weekend of March 19,2022. Whether a project review method is allowable or required depends on "The recent changes announced by Fannie Mae make condominium projects ineligible where there is significant deferred maintenance, such as postponement of normal maintenance that creates safety. a standard policy issued under the NFIP; or. Buildings with any of the following deficiencies will . the insurer meets Fannie Mae's rating requirements as specified in B7-3-01, Property . As a result of the Surfside, Florida Cordiaminum tower collapse, Fannie Mae has issued new eligibility guidelines for loans insured by Fannie Mae for condominium and co-op apartments. Years of deferred maintenance at the Champlain Towers in Surfside caused the 12-story building to collapse. On June 5th, Fannie Mae announced a significant list of changes to their condo project policies. Fannie Mae will prepopulate CPM on the new platform with data for approximately 13,000 condo and co-op projects that meet our eligibility requirements. To Fannie Mae, unavailable means a property is ineligible for purchase by the agency. Review all aspects of the project to determine that it satisfies Fannie Mae eligibility requirements as stated in B4-2.1-01, . the insurer meets Fannie Mae's rating requirements as specified in B7-3-01, Property . Freddie Mac and Fannie Mae's eligibility requirements allow 3% down payment condo purchase conventional loans to borrowers who qualify on owner occupant condos. In the latest development, Fannie Mae, the federally backed mortgage giant, has announced that it will no longer guarantee mortgages in co-ops or condominiums that have levied an assessment to pay for deferred maintenance that affects the structural integrity of the building. Fannie Mae is one of two government-sponsored enterprises that back a majority of conventional home loans. Fannie Mae passed one of the most stringent new regulations in 2009. Borrowers should recognize a property that met Fannie Mae condominium requirements in 2021, may not be eligible going forward.