New Project Eligibility Review Service and Changes to Condo and Co-Op Project Policies
December 18, 2008
Fannie Mae has issued Announcement 08-34: Project Eligibility Review Service and Changes to Condominium and Cooperative Project Policies to introduce the new Project Eligibility Review Service (PERS) and provide updates to our project standards policies for condo and co-op projects. In Announcement 07-18, Lender Delegation of Project Review Processes and Related Changes for Condominiums, Cooperatives, and Planned Unit Developments (PUDs), Fannie Mae delegated the project review process for condominiums, co-ops, and PUDs to our lenders. With this announcement, we are again offering a Fannie Mae review option and making other changes to better manage risks and support lenders.
All changes in this Announcement are applicable only to attached projects; our requirements for detached projects remain the same. Highlights of the announcement include:
- PERS (Project Eligibility Review Service) - This new, more comprehensive, project review service option allows you to submit new and newly converted attached condo projects to Fannie Mae to determine eligibility. Lenders are required to use PERS for all new and newly converted attached condo projects located in Florida. Although PERS is similar to the project acceptance review that Fannie Mae retired withAnnouncement07-18, PERS places additional focus on builder and developer information and provides for electronic submission.You may continue to use Lender Full Review and Condo Project Manager™ (CPM™)Expedited Review for projects with the exception of new projects located in Florida.
- Loan-to-Value (LTV) Ratio Requirements for Florida Condo Projects - LTV ratios will be reduced for established condo projects under the Limited Review, CPM Expedited Review, and FHA approved condo projects. A Florida condo being financed as a primary residence will continue to be eligible for up to 97 percent LTV in Desktop Underwriter® (DU®) (95% outside of DU) if the unit is in an eligible new project under PERS, or an eligible established project under either PERS or Lender Full Review.
- New and Revised Project Eligibility Requirements - We are introducing several updates and clarifications relating to fidelity and hazard insurance requirements, review of project legal documents, presale requirements, and other miscellaneous provisions.
- Additional Ineligible Project Criteria and Clarifications - We are adding three new ineligible project types and clarifying the usage of "spot loans," the treatment of owner-occupancy ratio requirements, and the usage of "master" or "blanket" project hazard insurance policies.
Delivery of Loans for Units in New Florida Projects Approved Prior to January 15, 2009
For new or newly converted condo projects in Florida approved by January 15, 2009:
- CPM Expedited Review - lender certifications ("Certified by Lender" or "Owner-Occupied and Second Home" recommendations) will be valid until expiration but may not be recertified.
- Lender Full Review - lenders with recently approved projects and valid loan applications in their pipeline must contact their Fannie Mae Customer Account Team by January 15, 2009 to determine pipeline coverage.
- Conditional Final Project Acceptance and Final Project Acceptance - will continue to be valid until the expiration date.
Note about Condo Project Manager (CPM)
CPM will be updated in a future release in early 2009 (date to be announced) to support provisions of Announcement 08-34, including: updating the questions regarding fidelity and hazard insurance, homeowners’ association dues, budget and legal review, and excessive financing structures; and restricting use of CPM for new and newly converted attached condo projects in Florida.
Fannie Mae will begin accepting PERS submissions on January 15, 2009. The process is described in Announcement 08-34, and additional communications will be forthcoming in the near future.
Requests for PERS reviews will be submitted electronically. The PERS forms are posted as standard (read-only) PDF documents on eFannieMae.com; interactive versions of the forms that can be filled in electronically will be posted before the effective date. Training and other resources will also be provided and details will be announced soon.
Reminder: Detached Condo Special Feature Code
As a reminder, we currently require the delivery of Special Feature Code (SFC) 588 for mortgage loans in detached condo projects. The use of this code is imperative to ensure accurate monitoring of condo projects.
For complete details on these changes, including effective dates, please see Announcement 08-34 on our 2008 Lender Announcements and Letters page on eFannieMae.com as well as the related FAQs document and other information on our Condo, Co-Op, and PUD Project Review page.