"Heads Up" on the Latest Condo/PUD Guidelines from Fannie Mae.

Posted by Danielle & David Contreras on Wednesday, April 1st, 2009 at 12:11pm.

Some of this is basic and some of it is brand new (2/24/09)...I'll high-light some of the new items to be aware of and to do your due diligence on:

The condominium must meet the below criteria for Established/finished Projects:

- At least 90% of the total units have been sold and recorded, and
- Control of the HOA has been turned over to the unit owners, and
- The project or conversion is complete and not subject to additional phasing or annexation.

In addition to meeting the Established Project criteria, the condominium must meet the following eligibility requirements:

- The LTV/CLTV does not exceed 90% for Primary Residences and 75% for Second Homes.
- The Condominium Project can not exceed 7 stories.
- The project does not have common areas or recreational facilities leased to or by the HOA.
- There is no litigation pending with regard to the project or HOA with respect to safety, structural soundness, or habitability of the property or adversely affect the financial solvency of the HOA.
- HOA must waive its "right of first refusal" to the sale, lease or transfer of a unit in case of foreclosure or deed in lieu.
- Commercial use within the project can not exceed 20% of the total square footage for the project and compatible with residential use.
- No more than 15% of total units are delinquent on their HOA dues by more than 30 days.
- The project is not an ineligible project, such as being subject to inclusionary zoning, being a condo-hotel or timeshare, having rental programs, multi-dwelling units, manufactured homes or houseboats.
- The HOA maintains "master" or "blanket" type of insurance covering all general and limited common elements with:100% replacement cost of project facilities, including individual units.
       - Maximum deductible is 5% of face amount of policy.
       - General liability coverage of $1,000,000 for bodily injury and property damage for  entire project for any single occurence.
       - Flood insurance, current coverage, if applicable.
       - Fidelity bond is required for any project with more than 20 units (coverage equal to the total monthly assessment of HOA dues for all units times 3 months).

There are now essentially 3 "underwrites" for condo buyers if he/she plan on putting less than 20% down.  First the 1st Mortgage, Second, there is the Mortgage Insuarance underwriter, and finally there are now Condo/PUD underwriters. 

To help make light of any Fannie Mae condo purchase call me and I will walk you through the process step by step.   800.577.4919 x 718

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