Requirements for Attached Condominium Projects in Florida
There are currently excessive unsold inventories of condominium project units in Florida resulting from the increase in building new condominium projects and the conversion of apartments to condominium ownership that occurred during the last several years. The increase in the number of units available is one of the factors that caused home prices toreach historical lows, particularly in the condominium market. As part of an ongoing review of business activities, Fannie Mae assessed the performance of mortgage loans secured by condominiums located in Florida and found that the number of loans currently delinquent or in default is at an all time high. As a result, Fannie Mae is modifying some of the terms under mortgage loans secured by attached units in condominium projects located in Florida will be accepted.
Clarification of Owner-Occupancy Ratio Requirements
Fannie Mae requires that established condominium projects consisting of attached units have an owner-occupancy ratio of at least 51 percent at the time the loan is originated(purchase or refinance) if the mortgage loan being delivered is secured by an investment property. Established projects where borrowers will occupy the unit or use the unit as asecond home are not subject to any owner-occupancy ratios.
Due to current market conditions, many condominium projects are experiencing higher numbers of financial institution- owned REO units, which many lenders may be countingas non-owner-occupied under Fannie Mae’s current requirements. Fannie Mae is clarifying its condominium project owner-occupancy ratio policy to include REO units that are for sale (not rented) as owner-occupied units in the owner occupancy ratio.
Projects where a borrower is an investor and the project does not meet the owner occupied ratio of 51 percent will only be eligible if the lender submits the project to Fannie Mae for review under PERS and the project is approved or as a single-loan project eligibility waiver and Fannie Mae approves the waiver based on its review of the overall risk of the project.
