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FANNIE MAE/FEDDIE MAC CONDO GUIDELINES

INELIGIBLE PROJECTS

A project in which any of the units are:

Manufactured Housing units. Project subject to the rules and regulations of the U.S. Securities and Exchange Commission;

Condominium Hotel; Project in which an owner may hold a single deed evidencing ownership of more than one unit;

Common-Interest apartments (e.g., cooperatives);

Project with fragmented or segmented ownership (e.g., timeshare units);

Houseboat project;

Attached project that is a legal nonconforming use wherein the project cannot be rebuilt to current density in the event of partial or full destruction; Project in litigation, arbitration, mediation, or other dispute when the dispute is focused on the safety, structural soundness or habitability of the project.

Project sold with excessive Seller Contributions

Mixed use projects defined as any project containing commercial space

Continuing Care Retirement Communities

Any project not eligible for sale to FNMA

PROJECT WARRANTIES

The Condominium Project must meet all applicable warranties as outlined in Chapter 42 of the FHLMC Selling Guide

PROJECT APPROVAL

Streamline Condominium Project Approvals are currently not accepted

The following documentation must be submitted

Project approval expiration dates must be valid at the time of closing

Condominium Constituent Documents (i.e.,Declaration of Condominium, Homeowners’ Association Articles of Incorporation, By-laws, etc).

Any amendments to the Condominium Constituent Documents

Any written agreement between the Homeowners’ Association and other parties (e.g. Professional Management Agreement, etc.)

The constituent documents of any Master Association and any amendments

Leasehold Estate documents, if applicable

Evidence of Insurance (co-insurance not accepted); if more than 20 units, Fidelity Bond Coverage in the HOA’s name will be required

Current Homeowners’ Association Budget and current balance sheet x Sample Appraisal if Unit is under construction

Appraisal of Subject Property if in an Established Project or is fully constructed

If Project has been converted within the last three years, a copy of the architect/engineer report obtained upon completion of the conversion, together with an itemization of the work done and approximate cost of those items and final inspection

Fully completed Condominium Letter, executed by the Homeowners’ Association or Developer, as appropriate, AND by the Originator of the Loan.

Project Approval is delegated to Correspondent Channel with an option to submit to Lender for approval of projects consisting of 50 units or more.**

CONDOMINIUM PROJECTS IN FLORIDA

New projects in Florida are only eligible if the project is approved through FNMA PERS process.

Newly converted projects (converted within the last three years) are not eligible for review, regardless of review type

DETACHED CONDOMINIUM PROJECT

If an Investment Property it must meet all of the requirements of either an Established Condominium Project or a New Condominium Project or a 2-4 Unit Condominium Project

A detached unit that is a legal nonconforming project is eligible even if legislation or local zoning does not permit the current improvements to be rebuilt to the current density in the event of partial or full destruction

There are no presale requirements or completion of common elements requirement if Primary Residence of Second Home

2-4 UNIT CONDOMINIUM PROJECT

All units and common elements in the project and in any master association must be complete; AND

All but one unit in the project have been conveyed to purchasers, other than the developer, who occupy their units as a primary residence or second home; AND

No single entity owns more than one unit in the project; AND

There are no manufactured homes in the condominium project

ESTABLISHED CONDO PROJECT

DEFINITION

It is an Established Condominium Project if it is not an ineligible project and it meets ALL of the following requirements:

All units and common elements are complete and not subject to any additional phasing or additions; AND

At least 90% of the total units have been conveyed to purchasers other than the developer; AND

The unit owners control the homeowners association; AND x No more than 15% of the homeowners’ association dues or assessments are delinquent 30 days or more; AND

Any right of first refusal will not adversely affect the rights of a mortgagee; AND

No single entity or individual owns more than 10% of the total number of units in the condominium project; AND

The condominium project is not comprised of any manufactured housing units; AND

All project warranties are met

A Condominium Letter from the homeowners association AND the originator of the loan must be provided and reviewed to make certain it meets the requirements of an Established Condominium Project.

Appraiser’s review is not acceptable documentation.

OWNER OCCUPANCY REQUIREMENTS

At least 51% of the total number of units must have been conveyed to purchasers other than the developer who occupy their units as a primary residence. Maximum 49% conveyed as second home and investment combined.

Maximum investor concentration may not exceed 25%

NEW CONDOMINIUM PROJECT

DEFINITION

It is a New Condominium Project if it is not an ineligible project and it meets the following requirements:

All units and common elements are not fully completed, or are subject to additional phasing or annexation; OR

Fewer than 90% of the total number of units in the project have been conveyed to purchasers other than the developer; OR

The developer has not turned control of the homeowners association over to the unit owners; AND

No more than 15% of the homeowners’ association dues or assessments are delinquent 30 days or more; AND

Any right of first refusal will not adversely affect the rights of a mortgagee; AND

No single entity or individual owns more than 10% of the total number of units in the condominium project; AND

The project is not comprised of any manufactured housing units; AND x All established project warranties are met; AND

All new project warranties are met

OWNER OCCUPANCY REQUIREMENTS

Either:

At least 70% of the total units in the project have been conveyed or are under contract to purchasers, other than the developer or a successor to the developer, who occupy or will occupy their unit as a Primary Residence or Second Home; OR

At least 70% of the total number of units in the subject legal phase must have been conveyed or are under contract to purchasers, other than the developer, or successor to the developer who occupy or will occupy their unit as a Primary Residence or Second Home AND

At least 70% of the sum of the total number of units in the subject legal phase plus the total number of units in all prior legal phases in which the units have been offered for sale must have been conveyed or are under contract to purchasers, other than the developer or successor to the developer, who occupy or who will occupy their unit as a Primary Residence or Second Home.

Additional Occupancy Requirements

Primary residence concentration must equal or exceed 51% Investment and Second Home (combined) concentration cannot exceed 49%

Investment concentration cannot exceed 25%

COMPLETION REQUIREMENTS

The subject legal phase and any prior legal phases in which units have been offered for sale are substantially complete.

“Substantially complete” indicates that the applicable jurisdiction has issued a ertificate of occupancy or its equivalent for the legal phase and that all units in the building in which the subject is located are complete