fha and fannie mae compliance & mandatory reserve requirements
DESCRIPTION
As presented by National Condo Advisors' CEO Orest Tomaselli at the ChicagolandTRANSCRIPT
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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