NJ Lenders Announces Fannie Mae Condo Updates
LITTLE FALLS, N.J. (PRWEB) June 13, 2018 -- NJ Lenders is happy to announce that on June 5th, 2018, Fannie Mae has made several positive updates to their condo, co-op, and PUD project policies. The Project Standards Update will now help simplify the policies and guidelines for our customers, and as a leading condo lender, NJ Lenders believes these changes will certainly help benefit the overall market and our clients.
“Fannie Mae’s recent changes will provide more liquidity in the condo market,” said Steve Grossman, Executive Vice President of NJ Lenders. “The changes will have a positive impact on consumers, and a number of projects that were difficult to obtain financing for are now going to be eligible for conventional financing.”
Please note that lenders can start applying these changes when reviewing projects effective immediately. The Selling Guide has also been updated to include references to these new forms.
For more information on the changes and updates, please refer to the following bullet notes that help describe the summary of the Project Standards Updates:
Single-Entity Ownership
• Waive the single-entity ownership requirement when the purchase transaction will result in a reduction in the single-entity ownership concentration (maximum single entity ownership 49%, no delinquent dues, no pending or active special assessments)
• Exempt units held by non-profits, affordable housing programs (including units subject to non-eviction rent regulation codes), or institutions of higher education from the percentage of single entity ownership calculation
• Allow single-entity ownership in projects with 21 or more units to increase to 20%
Commercial Space
• Exempt commercially owned or operated parking spaces from the project’s commercial space calculations
• Increase commercial space to 35%
Established Project Definition
• Allow a new condo project to be reviewed as an “established” project if it meets all the requirements for an established project other than the 90% unit conveyance policy. Allow 80% conveyance if the developer is holding back units as rental stock if additional requirements are met.
Investment Property Transactions
• Allow investor transactions to be eligible for Limited Review for LTV, CLTV, and HCLTV to 75%
FHA Project Review
• Allow delivery of conventional loans secured by units in established condo projects approved by FHA’s HUD Review and Approval Process (HRAP)
Two-to-Four-Unit Condo Projects
• Waive project review requirements, with the exception of some basic requirements that apply
Projects Consisting of Manufactured Homes
• Allow Full Review of established condo projects
• Condo and PUD projects subject to community land trusts, deed restrictions, leasehold estates, or shared equity arrangements may be eligible under the Fannie Mae Project Eligibility Review Service (PERS)
Legal Non-Conforming Zoning
• Align project standards policy to standard appraisal policy that requires the appraiser to comment on the market response to legal non-conforming zoning
Projects Operating as a Hotel or Motel (“Condotel” Policy)
Clarify criteria for identifying projects that operate as hotels or motels. The HOA and/or project cannot:
• Be licensed or managed/operated as a commercial hotel, motel, resort, or hospitality entity
• Restrict owners ability to occupy the unit during any part of the year
• Require owners to make their unit available for rental pooling (daily or otherwise)
• Require that the unit owners share profits from the rental of units to the HOA, management company, or resort or hotel rental company
Live-Work Condo Projects
• Simplify current policy with the requirement that live-work projects be primarily residential in nature and must be in compliance with local zoning or development regulations for live-work projects
Limited Equity Co-ops
• Allow limited-equity co-ops to be evaluated through the PERS process for project approval (both streamlined PERS and standard PERS) – limited equity feature must be related to an affordable housing preservation program and is in compliance with our requirements on resale restrictions when applicable
In addition to these changes, Fannie Mae has also taken the opportunity to remove, reorganize, and replace some of their content. For example, they have now removed the topic pertaining to detached condos, and have replaced it with a new topic describing the requirements that apply to projects and transactions for which a project review is waived. They also rid of any duplicate content that appeared in more than one topic, such as Project Type Codes. Any content that was seen in multiple topics have now been listed in their entirety in just one.
Not all condominium developments will meet Fannie Mae and Freddie Mac guidelines that allow them to be classified as "warrantable". There are additional condominium programs for financing those designated as non-warrantable.
About Selling Guide Announcement SEL-2018-05
The Selling Guide provides full details of the policy changes made on June 5th, 2018, which include the Project Standards Updates. Other highlighted topics that have been updated include MH Advantage™ Properties, Inspection of Manufactured Homes with Structural Modifications, Flash Settlement for MBS, Desktop Underwriter® (DU®) Bankruptcy and Mortgage Delinquency Assessment, HomeStyle® Energy in DU, HomeStyle Renovation Forms, and Miscellaneous Selling Guide Updates. The Selling Guide has also brought back a highlighted PDF that showcase the changes, starting with the ones that were made in June 2018. The PDF provides readers with a simple way to identify the most recent and significant changes that were made to the Selling Guide.
About NJ Lenders Corp
NJ Lenders is a leading New Jersey and New York Mortgage Company that is privately owned and licensed as a residential mortgage banker. Founded in 1991, the company currently originates first and second mortgage loans in NJ, NY, CT, PA, VA, MD, and FL. With seven offices and over $25 billion in closed mortgage loans, many of their Mortgage Loan Originators are recognized nationally as the best in their field.
Steven Grossman, NJ Lenders Corp, http://www.njlenders.com, +1 (973) 890-0005, [email protected]
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