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Fannie Mae Guidelines Condo

Fannie mae guidelines condo has seen some major changes in the last few months and it is good news for the Realtors and their respective clients. The mortgage corporation has recently announced several updates in its condo guidelines in order to enable many lenders to quickly approve home loan programs to those borrowers who rely on condominiums for their accommodation.

New Fannie Mae Guidelines for Condos

The new guidelines for condos by Fannie Mae includes a more simplified and straightforward process of approval for condominium development projects. These guidelines have less restrictive eligibility criteria such as reduction of some pre-sale requirements and loosening of investor concentration limitations. The followings are some features of the new Fannie Mae condo guidelines;
  • Reduction in development documentation requirements
  • Highly reduced budget and legal review requirements
  • Simplified process of reviewing developments that include acceptance of FHA approved condo developments.

Fannie Mae Condominium Lending Guidelines

Fannie Mae has announced its new condominium lending guidelines in the first quarter of this year in response to the sub-prime mortgage lending crisis. According to the new condo lending guidelines, 70% of the units for new construction or newly converted condo developments should be pre-sold. Not more than 15% of the condo project units must be over 30 days delinquent on HOA dues. Moreover, fidelity insurance will also be required for those condos with 20 or more units ensuring that all the homeowner association funds are always protected. At present, the above requirement applies only to new projects and also been extended to include established condos.

The new Fannie Mae condo guidelines also states that a single entity is not allowed to own more than 10% of a specific project. A condominium project is also allowed to consist not more than 20% of non-residential space.

According to latest Fannie Mae guidelines condo, the homeowners association are required to have a minimum of 10% of its budgeted income which is designated for replacement reserves. These new lending guidelines may probably not apply to all the existing condo projects. Moreover, several guidelines can also be modified for certain condo projects on case-by-case basis. However, it is been widely believed that the revised guidelines may probably affect the buyers ability to avail a conventional loan for a new or an established condo if the project fails to conform.
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