CONDO  LENDING  GUIDELINE  UPDATE:  

 FHA  and  Fannie  Mae  Compliance    &  

Mandatory  Reserve  Requirements  Presented  by:  Orest  Tomaselli,  CEO    

Na7onal  Condo  Advisors,  LLC  

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NaEonal  Condo  Advisors,  LLC:  The  na7on’s  premier  condominium  

project  approval  service.  

www.na7onalcondoadvisors.com  Ph.  888-­‐726-­‐6361  

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Overview  

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•  FHA  guideline  compliance  •  FHA  Project  CerEficaEon  requirements  

•  10%  budget  reserve  requirement  •  Mandatory  Reserve  Study  requirements  •  Fannie  Mae  guideline  compliance  

Those  who  don’t  comply:  The  non–warrantable  

• Approximately  30%  of  all  mortgage  loans  na7onwide  

• Reverse  mortgages  allow  homeowners  above  the  age  of  62  a  unique  op7on  for  financing  

• Allows  mortgages  with  lower  down  payment  and  reduced  credit  score  requirements  

Recent  project  approval  withdrawal  has  recently          resulted  in  over  9200  developments  na;onally  that  were  removed  from  the  project  approval  list  

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FHA  Lending:  Important?    

•  Project  approval  is  required  for  any  FHA  financing  within  a  condominium  community  

•  Individual  ‘spot  loan’  approval  discon7nued  

•  At  least  50%  of  the  units  are  owner  occupied  

•  No  one  investor  can  own  more  than  10%  of  the  units  within  the  development  

•  No  more  than  15%  of  the  total  units  are  more  than  30  days  past  due  on  HOA  dues.    The  15%  includes  bank  owned  and  vacant  units  

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FHA  Condo  Guideline  Compliance:    The  Basics  

•  Signing  the  project  cer7fica7on  

•  State  and  local  law  compliance  cer7fica7on  

Whom  is  qualified  to  make  this  representaEon?  

•  Ongoing  cer7fica7on  obliga7on  

What  are  the  risks  in  cerEfying  to  ongoing  compliance?  

•  Up  to  $1,000,000  fine  and  30  years  imprisonment  for  false  or  fraudulent  statements  

• Knowing  penal7es  for  fraudulent  cer7fica7on    

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FHA  Project  CerEficaEons:  Updated  Compliance  Requirements  

•  Community  Associa7on  Loans  

Are  you  automaEcally  rejected  if  your  community  has  a  loan?  

•  Special  Assessments  

What  will  you  have  to  submit?  

•  Pending  Li7ga7on    What  has  to  be  disclosed?  

Statement  must  be  signed  by  aSorney    

•  Transfer  Fees  

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FHA  Project  CerEficaEons:  PotenEal  Landmines  

•  10%  Line  item  for  reserves  

In  the  absence  of  a  specific  guideline  requiring  a  reserve  study,  a  10%  line  item  within  the  budget  is  to  be  uElized  

•  In  order  to  accurately  fund  the  reserve  account  for  a  condominium,  a  reserve  study,  that  is  compliant  with  FHA  and  Fannie  Mae  guidelines,  can  be  u7lized.    

Provides  accurate  reserve  requirements  and  funding  overview.  DeterminaEon  of  reserve  study,  whether  higher  than  10%  or  lower  than  10%,  may  be  uElized  as  a  line  item  for  reserve.    

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 Reserve  Requirements  

FHA  

•  Newly  converted  non-­‐gut  rehab  conversion  condo  •  Newly  converted  gut  rehab  condo  •  Distressed  asset  purchases  •  Proper7es  with  li7ga7on  •  At  the  discre7on  of  underwri7ng  

Fannie  Mae  

•  Non-­‐gut  rehab  conversion  condo  

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 Mandatory  Reserve  Study    

•  Bankruptcy/Receivership/Foreclosure/  Deed-­‐in-­‐Lieu  of  Foreclosure  

One  year  aging  required  for  eligibility  

Financial  document  review  to  determine  eligibility  

Reserve  study  required  

•  Asset  Sale  50%  of  declared  units  must  be  owner  occupied    

Reserve  study  required  

AddiEonal  financial  oversight  may  be  requested  

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New  Condominium  Developments:    Distressed  Asset  Purchases  

•  Warranty  of  condo  project  legal  requirements  

•  Compliance  with  laws  

•  Limita7ons  on  ability  to  sell/right  of  first  refusal  

•  Amendments  to  documents  

•  Rights  of  condo  mortgagees  and  guarantors  

•  First  mortgagee’s  rights  confirmed  

•  Unpaid  dues  •  Fannie  Mae  Form  1054    

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Fannie  Mae    

•  Limited  available  lending  

•  Increased  interest  rates  

•  Limited  loan  terms  

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Those  Who  Don’t  Comply:    The  non-­‐warrantables  

Ques7ons?  

Stop  by  booth  #407  and  meet  Reserve  Study  expert  Dave  Nielsen  from  Strategic  

Inspec7ons.    Ask  him  about  a  free  reserve  study  pre-­‐determina7on!  

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Thank  you!    

*Na7onal  Condo  Advisors,  LLC  is  not  a  law  firm.    None  of  the  guidance  or  advice  contained  within  should  be  considered  or  construed  as  legal  advice  from  either  NCA  or  any  of  its  employees.    We  recommend  you  

consult  with  your  ajorney  regarding  the  informa7on  provided  within.  

www.na7onalcondoadvisors.com  Ph.  888-­‐726-­‐6361  

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