Navigating Through Fannie Mae’s New Condo Guidelines
By C. J. Coury
On January 15th, Fannie Mae changed their requirements for the purchase of condominium mortgage loans in the state of Florida. While these changes are certainly going to make it more difficult to obtain financing on these purchases there are some things that you can do to help mitigate this obstacle. Below are the most significant changes as well as some helpful tips.
Full Review of Existing Projects: Many lenders will have the ability to review and approve existing projects. This will save substantial costs ($1,200 + $30 per unit) vs. obtaining project approval through Fannie Mae. It will be necessary for the lender to contact HOA management to have their full review form completed. Help to expedite loan approval by providing them with the contact information.
Fannie Mae Review of New and Newly Converted Projects: On any newly constructed or newly converted projects a PERS review by Fannie Mae is required. The cost of this review is $30 per unit as they are currently waiving the $1,200 fee. Once a review has been completed the results will be posted on their web site at www.efanniemae.com [1]. Prior to listing any Florida condominium for sale you should first check this site and obtain approval if it is not yet listed there. Set the right expectations and allow them time to complete their review – currently projected to take 2 weeks.
Pre-sale Requirements: The pre-sale requirement for new or newly converted attached projects has increased from 51% to 70%. However, this requirement can be waived on a project that has received a PERS review (see above) so I don’t see this as being much of an issue at this time.
HOA Dues: No more than 15% of the unit owners can be 30 days or more past due on their condominium/association fees. Not much you can do about this one other than ask the HOA management in advance.
Insurance Requirements: Although it has always been a good idea, individual “walls in” coverage has never been a requirement. This will now be required of the buyer on most projects. This will be determined during the project review process (see above). Again, best practice is to obtain project review in advance.
There are a few other changes to their approval requirements but these are the primary ones that you should understand and discuss with your seller or buyer.
Be proactive when listing or selling a condominium to learn if financing the purchase will be an issue.
BIO
C. J. Coury is a Senior Vice President with Bank of America and oversees their residential mortgage division serving Sarasota, Manatee and Charlotte Counties. Prior to joining Bank of America in 1995, C. J. was President of Mortgage Brokers of America in Birmingham, MI for 7 years. He has been an active mortgage finance professional since 1983. C. J. may be reached at (941) 952-2888 or by email at charles.j.coury@bankofamerica.com [2].
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