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FHA and Fannie Mae Compliance & Mandatory Reserve Requirements
1. CONDO
LENDING
GUIDELINE
UPDATE:
FHA
and
Fannie
Mae
Compliance
&
Mandatory
Reserve
Requirements
Presented
by:
Orest
Tomaselli,
CEO
Na7onal
Condo
Advisors,
LLC
1
2. NaEonal
Condo
Advisors,
LLC:
The
na7on’s
premier
condominium
project
approval
service.
www.na7onalcondoadvisors.com
Ph.
888-‐726-‐6361
2
3. Overview
• 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
3
4. FHA
Lending:
Important?
• 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
4
5. FHA
Condo
Guideline
Compliance:
The
Basics
• 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
5
6. FHA
Project
CerEficaEons:
Updated
Compliance
Requirements
• 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
6
7. FHA
Project
CerEficaEons:
PotenEal
Landmines
• 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
7
8. Reserve
Requirements
• 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.
8
9. Mandatory
Reserve
Study
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
9
10. New
Condominium
Developments:
Distressed
Asset
Purchases
• 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
10
11. Fannie
Mae
• 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
11
12. Those
Who
Don’t
Comply:
The
non-‐warrantables
• Limited
available
lending
• Increased
interest
rates
• Limited
loan
terms
12
13. Thank
you!
Ques7ons?
Stop
by
booth
#407
and
meet
Reserve
Study
expert
Dave
Nielsen
from
Strategic
Inspec7ons.
Ask
him
about
a
free
reserve
study
pre-‐determina7on!
13
14. *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
14