Vince Carida, SVP of Weichert Financial Services, informs us that Fannie Mae has announced several revisions to their condominium project policy for new loan originations. These revisions include the following:
1) Fannie Mae is increasing the pre-sale eligibility requirement for attached new or newly converted condominium projects to 70% of the total units in the project or subject legal phase, which must have been conveyed or be under a bona fide contract for purchase to principal residence or second home purchasers (up from 51%).
2) Fannie Mae is now requiring that no more than 15% of the total units in a project can be 30 days or more past due on the payment of their condominium/association fees.
3) Fannie Mae now requires that borrowers obtain a “walls in” coverage policy (commonly known as HO-6 policy) unless the lender can document that the master policy provides the same interior unit coverage. The master policy must include the replacement of improvements and betterment coverage to cover any improvements that the borrower may have made to unit. The HO-6 policy must provide coverage in an amount that is no less than 20% of the condominium unit’s appraised value.
4) Fannie Mae has revised their legal review policy and has now eliminated the requirement for lenders to represent and warrant the legal review for established condominium projects and established and new 2-4 unit condominium projects. Freddie Mac has not revised their policy so loans originated in the above outlined projects must be earmarked for delivery to Fannie Mae.
5) Fannie Mae has added three additional ineligibility characteristics to their policy: a) new projects with sale/financing structures in excess of their eligibility policies, b) projects where more than 20% of the total space is used for non-residential purposes and c) projects where a single entity owns more than 10% of the total units in the project.
6) Fannie Mae has now restricted lenders from delegated review of new and newly converted condominium projects in Florida. Lenders now have to use Fannie Mae’s Project Eligibility Service for project approvals in Florida.