8447779800, Low rate Call girls in New Ashok Nagar Delhi NCR
2011 Fannie Mae and FHA Guidelines: Implications for Condos
1. FANNIE
MAE
&
FHA
REGULATIONS
:
I M P L I C A T I O N S
F O R
C O N D O M I N I U M
OREST TOMASELLI, CEO, NATIONAL CONDO ADVISORS
NATIONALCONDOADVISORS.COM
2. OVERVIEW
The
History
of
Condo:
Fannie
Mae,
FHA,
and
Lenders
Fannie
Mae
&
FHA
Today
PERS
CPM
DELRAP/HRAP
Top
5
Challenges
for
Condo
Developments
PorHolio
Lenders
Industry
PredicKons
3. 1990-‐2000s
FANNIE
MAE:
A
HISTORY
1990s:
Tighter
guidelines
with
presale
requirements
• Loans
below
presale
were
originated
through
porHolio
lenders
2000-‐2008:
Agencies
began
to
loosen
condo
standards.
OriginaKng
loans
focused
more
on
the
credit
rather
than
collateral
• Loosening
condo
standards
started
with
O/O
80%
CLTVs
and
gradually
expanded
• At
the
height
95%
CLTV
loans
were
originated
with
liYle
to
no
review
of
the
condominium
elements2000-‐2008:
Agencies
began
to
loosen
condo
• Most
major
lenders
had
waivers
allowing
even
more
flexibility
4. 2000-‐2008
LENDER
HISTORY
No
presale
requirement
Commercial
space
allowance
up
to
50%
Landleases
rarely
invesKgated
outside
of
the
term
CompleKon
of
common
elements
or
addiKonal
buildings
rarely
considered
Very
liYle
concern
regarding
conversions
or
current
renters
Condos
in
resort
areas
rarely
invesKgated
outside
of
glaring
condotel
elements
HOA
budgets
and
financials
rarely
ever
reviewed
No
Doc,
Stated
Income,
NIVA,
100%
financing,
credit
scores
down
to
580,
etc…
Buyer
credit
docs
valid
for
up
to
one
year
5. FANNIE
MAE:
START
OF
CHANGE
Announcement
7-‐18
in
November
2007
began
major
changes
for
condo
approval
•
FNMA
reKred
the
1028
process
•
Removed
the
ability
for
new
condos
to
use
Limited
Review
•
Put
the
emphasis
of
new
condo
review
on
FNMA
CPM
•
Provided
20%
commercial
space
requirement
•
Pushed
responsibility
to
the
lender
•
Major
lenders
sKll
had
their
waivers
in
place
6. FANNIE
MAE:
START
OF
CHANGE
Announcement
8-‐13
in
December
2008
created
more
thorough
implementaKon
of
stringent
guidelines
Increased
presale
to
70%
FNMA
re-‐instated
1028
process
now
called
PERS
Created
a
stronger
reliance
on
FNMA
systems
(CPM
and
PERS)
Marked
the
beginning
of
more
stringency
for
conversions,
commercial
space,
and
budgets
Marked
the
end
to
most
major
lender’s
waivers
Mandated
all
new
Florida
condos
sent
to
PERS
Began
higher
scruKny
of
condos
in
resort
areas
7. 2009
FHA:
A
HISTORY
Mortgagee
LeYer
2009
46A&B
•
Created
the
DELRAP/HRAP
process
•
Spot
loans
eliminated
•
30%
presale
for
new
condos
•
Allowed
right
of
first
refusal
•
10
yr
warranty
not
be
required
with
CO
and
building
permits
•
Condo
conversions
will
not
have
to
wait
1
year
for
eligibility
•
Provided
25%
commercial
space
requirement
•
10%
line
item
for
reserves
8. 2011
FHA:
A
HISTORY
11-‐22
Mortgagee
LeYer
Guide
• Time
limits
on
30%
presale
• All
conversions
less
than
2
years
old
to
be
approved
via
HRAP
and
requires
a
reserve
study
with
50%
presale
requirement
• More
flexibility
for
sponsor
ownership
during
conversion
• More
stringent
review
for
projects
involved
with
aucKon,
BK,
deed-‐in-‐
lieu,
asset
sale,
and
receivership
• More
stringent
review
of
HOA
budget
and
financials
9. .
New
CONDO
APPROVAL
OPTIONS
Condominiums
TODAY
CPM:
Lender
Delegated
Automated
UW.
Capability
to
reach
51%
presale.
Lender
Full
Review
PERS
Submission:
UKlized
many
Kmes
for
excepKons
(rent
regulaKon,
excessive
commercial
space,
etc..)
or
markeKng
purposes.
Mandatory
for
Florida
project.
Cost
for
submission
FHA/VA
Review:
DELRAP
or
HRAP
PorHolio
Lenders
10. .
Established
CONDO
APPROVAL
OPTIONS
Condominiums
TODAY
• Limited
Review
(FNMA)
• Any
opKons
listed
for
new
condominiums
11. TOP
5
CHALLENGES
FOR
CONDOS
1.
Fannie
Mae
Legal
Requirements
By-‐law
revisions
Unit
owner
vote
requirements
12. TOP
5
CHALLENGES
FOR
CONDOS
2.
Non
Gut
Rehab
Conversions
Established
vs.
Non
Established
Mandatory
reserve
studies
for
newly
converted
5
years
of
repair
cost
in
reserve
fund
13. TOP
5
CHALLENGES
FOR
CONDOS
3.
Reserve
Requirements
Departure
from
the
Special
Assessment
10%
Line
item
within
the
budget
Ongoing
contribuKon
14. TOP
5
CHALLENGES
FOR
CONDOS
4.
Commercial
Space
Fannie
Mae:
above
20%
-‐trigger
FHA:
above
25%
-‐
cannot
be
approved
Condo
hotel:
prevalence
15. TOP
5
CHALLENGES
FOR
CONDOS
5.
LiVgaVon
Trigger
for
Fannie
Mae
PERS
and
FHA
HRAP
submission
ConstrucKon
deficiency
Slip
and
fall
16. PORTFOLIO
LENDERS
Terms
olen
not
as
compeKKve:
• Higher
down
payment
requirements,
interest
rates,
credit
score
requirements
PotenKal
downsides:
• Usually
not
designed
for
LMI
buyers
• Not
always
reliable
for
long
term.
• PotenKal
probability
to
be
“adversely
selected”
• Buyers
not
always
comfortable
with
unknown
sources
for
funding
• Media
has
convinced
many
people
to
look
for
FNMA
approval
and
adequate
presale
requirements
17. INDUSTRY
PREDICTIONS
Lenders
will
conKnue
to
become
more
knowledgeable
through
necessity
More
buy-‐backs
Desire
to
lend
to
certain
clientele
Some
lenders
to
selecKvely
choose
to
porHolio
Presale
being
primary
driving
factor
Elements
that
would
cause
FNMA
to
never
approve
are
less
likely
Credit
profile
to
be
significant
component
Less
flexibility
through
FNMA
and
HUD
Financial
review
to
become
a
key
component
for
reviews
18. QUESTIONS/COMMENTS?
*NaKonal
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
aYorney
regarding
the
informaKon
provided
within.