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CONDO	  LENDING	  GUIDELINE	  UPDATE:	    	  FHA	  and	  Fannie	  Mae	  Compliance	  	                            &	    Ma...
NaEonal	  Condo	  Advisors,	  LLC:	  The	  na7on’s	  premier	  condominium	          project	  approval	  service.	       ...
Overview	  •  FHA	  guideline	  compliance	  •  FHA	  Project	  CerEficaEon	  requirements	  •  10%	  budget	  reserve	  re...
FHA	  Lending:	  Important?	  	  • Approximately	  30%	  of	  all	  mortgage	  loans	  na7onwide	  • Reverse	  mortgages	 ...
FHA	  Condo	  Guideline	  Compliance:	  	                     The	  Basics	  •  Project	  approval	  is	  required	  for	 ...
FHA	  Project	  CerEficaEons:	         Updated	  Compliance	  Requirements	  •  Signing	  the	  project	  cer7fica7on	  •  S...
FHA	  Project	  CerEficaEons:	                   PotenEal	  Landmines	  •  Community	  Associa7on	  Loans	      Are	  you	 ...
 Reserve	  Requirements	  •  10%	  Line	  item	  for	  reserves	      In	  the	  absence	  of	  a	  specific	  guideline	  ...
 Mandatory	  Reserve	  Study	  	  FHA	  •  Newly	  converted	  non-­‐gut	  rehab	  conversion	  condo	  •  Newly	  convert...
New	  Condominium	  Developments:	  	            Distressed	  Asset	  Purchases	  •  Bankruptcy/Receivership/Foreclosure/	...
Fannie	  Mae	  	  •    Warranty	  of	  condo	  project	  legal	  requirements	  •    Compliance	  with	  laws	  •    Limit...
Those	  Who	  Don’t	  Comply:	                  	  The	  non-­‐warrantables	  •  Limited	  available	  lending	  •  Increa...
Thank	  you!	  	                          Ques7ons?	  Stop	  by	  booth	  #407	  and	  meet	  Reserve	  Study	        expe...
*Na7onal	  Condo	  Advisors,	  LLC	  is	  not	  a	  law	  firm.	  	  None	  of	  the	  guidance	  or	  advice	  contained	 ...
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FHA and Fannie Mae Compliance & Mandatory Reserve Requirements

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As presented by National Condo Advisors' CEO Orest Tomaselli at the Chicagoland

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FHA and Fannie Mae Compliance & Mandatory Reserve Requirements

  1. 1. CONDO  LENDING  GUIDELINE  UPDATE:    FHA  and  Fannie  Mae  Compliance     &   Mandatory  Reserve  Requirements   Presented  by:  Orest  Tomaselli,  CEO     Na7onal  Condo  Advisors,  LLC   1  
  2. 2. NaEonal  Condo  Advisors,  LLC:  The  na7on’s  premier  condominium   project  approval  service.   www.na7onalcondoadvisors.com   Ph.  888-­‐726-­‐6361   2  
  3. 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. 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. 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. 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. 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. 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. 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. 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. 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. 12. Those  Who  Don’t  Comply:    The  non-­‐warrantables  •  Limited  available  lending  •  Increased  interest  rates  •  Limited  loan  terms   12  
  13. 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. 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  

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