Fannie Mae Condo Financing and Reserves

by | Oct 2, 2017 | Mortgage Information

        Condos which are being financed   by Fannie Mae are subject to not only borrower qualification, but   also condominium association approval by the lender. The lender must   determine the association’s soundness by performing a condominium review of   the project.  There are two types of condo reviews; a full condo review and   a limited condo   review. The determination on when one review is used over the   other rests primarily on occupancy type and down payment. If the buyer is   purchasing a primary residence and is putting less than 25% down, or the   buyer is purchasing a second home and is putting less than 30% down, or the   buyer is purchasing an investment property, the purchase is subject to a full   condominium review. On the flip side, if the buyer is purchasing a primary  residence with at least 25% down or a second home with at least 30% down, the   purchase will be subject to a limited condo review. One of the biggest   differences in the two types of reviews is the lender’s responsibility to   analyze the Association’s budget and to see if it is setting aside sufficient   reserves for future replacements – in a full condo review, this is required,   in a limited condo review, this is not required. When determining if reserves are sufficient, the lender must review the HOA   projected budget to determine that it: is adequate (i.e., it        includes allocations for line items pertinent to the type of condo        project), and provides for the funding of       ...

Fannie Mae Joins Freddie Mac in allowing Appraisal Free Purchase Mortgages

by | Aug 31, 2017 | Mortgage Information

    Freddie Mac announced two weeks ago that beginning September 1, 2017 they will allow certain purchase mortgages to not require an appraisal to complete the transaction. One week later, Fannie Mae followed suit in allowing appraisal free purchase mortgages on certain transactions beginning immediately. Transactions are limited to loans that have LTV ratios (loan to value) of 80% or less and most transactions with a down payment of 20% or more are still expected to require an appraisal. Transactions that do not require an appraisal are given a PIW (Property Inspection Waiver) which are granted by valuing the property through algorithms and databases of existing data compiled by millions of existing appraisals. The percentage of homes that will be granted a PIW is still up in the air to the general lending community and more information will become available over the upcoming...