Fannie Mae streamlines real estate lending guidelines for condos
|March 31, 2005
Changes are intended to facilitate affordable financing for first-time buyers
Mortgage giant Fannie Mae will update its condominium guidelines to assist mortgage lenders in obtaining project approval for home buyers' condo purchases.
The update, slated to take effect in the second quarter of 2005, is intended to help lenders serve more first-time homebuyers seeking affordable financing.
Fannie Mae will update its condo guidelines in response to lenders who asked for clearer, more concise project approval guidelines in order to originate more condominium loans, which can be an affordable alternative to single-family detached homes.
The changes announced today will include a more straightforward process for condominium project approval and less restrictive eligibility criteria, including the reduction of some pre-sale requirements and a loosening of investor concentration limitations. Details of the changes will be provided in a Fannie Mae Selling Guide announcement, to be issued in early May.
The changes will cover four categories, based on the four processes by which a single-family mortgage loan secured by a condominium unit will be approved for delivery to Fannie Mae:
- Limited Review: the most streamlined way to gain approval to deliver a condo loan will be expanded with broader eligibility criteria.
- Expedited Review: this new lender-delegated review category will allow more condo projects to benefit from a streamlined process and more flexible eligibility guidelines, including reduced pre-sale requirements. Expedited Review will be supported by a new web-based online lender registration and project management system known as CondoProjectManager.
- Streamlined Fannie Mae (1028) Review: for those projects that are not eligible for Expedited Review, the current Fannie Mae (1028) review process will be simplified, with reduced pre-sale requirements on certain projects and increased allowable investor concentrations.
FHA Condominium Approvals: Fannie Mae will begin accepting most Federal Housing Administration condo project approvals without requiring a separate Fannie Mae project acceptance, which is intended to save lenders' time and money while eliminating duplication of effort.
"Condominiums are a first step to homeownership for many first-time buyers, and are a more affordable housing option in many high-cost areas. These updated condominium guidelines will ease the process for obtaining Fannie Mae acceptance for condo projects, which should ultimately benefit home buyers seeking financing on condo units," said Tom Lund, acting head of Fannie Mae's single-family business unit.
The revised condominium project standards are intended to enable more lenders to participate in condo lending, and boost the availability of Fannie Mae accepted condominium projects in smaller markets, said Lund.
Training on the new condo guidelines and CondoProjectManager will be available to lenders in May.
Source: Inman News