FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Ineligible Projects
Criteria
FHA
1. Condominium Hotel or
“Condotels”.
2. Timeshares or segmented
ownership projects.
3. Houseboat projects.
4. Multi-dwelling unit
condominiums (i.e. more
than one dwelling per
condominium unit).
5. All projects not deemed to
be used primarily as
residential
6. Projects where more than
25% of total space is used
for nonresidential purposes
(live-work units where more
than 25% of the total project
or unit square footage is used
for nonresidential purposes).
7. Projects located within
designated coastal barriers of
the Atlantic Ocean, Gulf of
Mexico, or the Great Lakes.
8. Assisted living facilities.
9. Developer owned common
area or amenities once
transfer of control has been
turned over to the HOA.
FNMA (Fannie Mae)
1. Projects that include registration
services and offer rentals of
units on a daily basis.
2. Projects in which individual
units are operated as a
commercial hotel or motel.
3. Projects with names that include
the words “hotel” or “motel”.
4. Projects that restrict the owner’s
ability to occupy the unit.
5. Projects with mandatory rental
pooling agreements that require
unit owners to either rent their
unit or give a management firm
control over the occupancy of
the units.
6. Projects with non-incidental
business operations owned or
operated by the homeowners’
association such as, but not
limited to, a restaurant, a spa, a
health club, etc.
7. Investment securities (i.e.,
projects that have documents on
file with the Securities and
Exchange Commission, or
projects where unit ownership is
characterized or promoted as an
investment opportunity.)
{05555341.DOC;2}
1 of 49
FHLMC (Freddie Mac)
1.
Projects subject to federal
or State securities
regulations.
2. Hotel/Resort projects.
3. Projects with multidwelling units.
4. Projects with nonincidental commercial
space (over 20% of total
square footage in project).
5. Projects with nonincidental commercial
income (over 20% of
income from sources other
than dues/assessments).
6. Common-interest
apartment projects.
7. Projects with fragmented
or segmented ownership.
8. Timeshare projects.
9. Houseboat projects.
10. Attached Condominium
Projects that are legal
nonconforming.
11. Projects in litigation,
arbitration, mediation or
other dispute and the
reason for the dispute
Source/Date
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 1.4 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Chapter B42/Section B42.1-02 (Dated
October 30,
2009).
3. Freddie Mac
Single-Family
Seller/Servicer
Guide/Volume
1/Chapter
42/Section 42.3
(Dated October
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Ineligible Projects
Criteria
FHA
FNMA (Fannie Mae)
8. Common interest apartments or
community apartment projects
or buildings that are owned by
several owners as tenants-incommon or by a homeowners’
association in which individuals
have an undivided interest in a
residential apartment building
and land, and have the right of
exclusive occupancy of a
specific apartment in the
building.
9. Timeshare or segmented
ownership projects.
10. Houseboat projects.
11. New projects where the seller is
offering sale/financing structures
in excess of Fannie Mae’s
eligibility policies for individual
mortgage loans, including but
not limited to: builder/developer
contributions, sales concessions,
HOA or principal and interest
payment abatements, and/or
contributions not disclosed on
the HUD-1 Settlement
Statement.
{05555341.DOC;2}
2 of 49
FHLMC (Freddie Mac)
12.
13.
14.
15.
16.
involves safety, structural
soundness or habitability
of the project.
Project sold with
excessive Seller
contributions.
Project with excessive
single investor
concentration.
Project with fractured
interest.
Continuing Care
Retirement Communities.
Any Condominium
Project that Fannie Mae
has rejected.
Source/Date
9, 2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Ineligible Projects
Criteria
FHA
FNMA (Fannie Mae)
12. Projects where more than 20%
of the total space is used for
nonresidential purposes.
13. Projects where a single entity
(the same individual, investor
group, partnership, or
corporation) owns more than
10% of the total units in the
project.
14. Multi-dwelling unit condos or
co-ops – projects that permit an
owner to hold title (or stock
ownership and the
accompanying occupancy rights)
to more than one dwelling unit,
with ownership of all of his or
her owned units (or shares)
evidenced by a single deed and
financed by a single mortgage
(or share loan).
15. Condo or co-op projects that
represent a legal, but nonconforming, use of the land, if
zoning regulations prohibit
rebuilding the improvement to
current density in the event of
their partial or full destruction.
{05555341.DOC;2}
3 of 49
FHLMC (Freddie Mac)
Source/Date
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Ineligible Projects
Criteria
FHA
FNMA (Fannie Mae)
16. A tax-sheltered syndicate’s
leasing to a co-op or “leasing”
co-ops – projects that involve
the leasing of the land and the
improvements to the co-op
corporation, even if the co-op
corporation owns part of the
building.
17. Co-op projects that are subject to
leasehold estates.
18. Limited equity co-ops – projects
in which the co-op corporation
places a limit on the amount of
return that can be received when
stock or shares are sold.
19. Co-op projects with units that
are subject to resale restrictions
or located on land owned by
community land trusts.
20. Co-op projects in which the
developer or sponsor has an
ownership interest or other rights
in the project real estate or
facilities other than the interest
or rights it has in relation to
unsold units.
21. Any project for which the
homeowners’ association or coop corporation is named as a
{05555341.DOC;2}
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FHLMC (Freddie Mac)
Source/Date
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
1. All units and common
elements are not fully
completed, or are subject
to additional phasing or
annexation;
2. The project or 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 certificate of
occupancy or its
equivalent for the legal
phase, and that all units in
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 201122, Sections
1.4 and 1.5 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
party to current litigation or, any
project for which the project
sponsor or developer is named
as a party to current litigation
that relates to the project, if the
project has not been turned over
to the association or corporation
(excluding foreclosure and
collection actions).
Ineligible Projects
New Communities or
Conversions
Eligibility Criteria
The project must consist of two or
more units.
Type of Community:
1. Proposed;
2. Under Construction (not
completed or is under 1 year
of completion)
3. Conversions (Non-Gut
Rehabilitation or Gut
Rehabilitation)
Converted, Gut and Non-Gut
Rehabilitation Project:

Must be processed under
DELRAP.
1. Fewer than 90% of the total
units in the project have been
conveyed to the unit purchasers.
2. Project is not fully completed,
such as proposed construction,
new construction, or the
proposed or incomplete
conversion of an existing
building to a condo.
3. Project is newly converted.
4. Project is subject to additional
phasing.
5. Project, or subject legal phase,
must be “substantially
complete”. This means that:
 A certificate of
occupancy or other
{05555341.DOC;2}
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FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA

New
Communities/Projects





Conversion must be
complete, as evidenced by
engineering or architectural
inspection (within 12 mos. of
completion).
Current reserve study (no
more than 24 months old)
must be provided.
Budget, balance sheet and
income/expense statement of
less than 90 days old must all
be provided and demonstrate
sufficient maintenance,
reserves, deductibles and
reserve study items
adequately funded.
Detailed description of work
proposed and/or completed
required.
51% units must be conveyed
or under contract for
purchase to owner
occupants.
No more than 49% of total
units can be owned by
developer (exempt from 10%
investor limit).
FNMA (Fannie Mae)
substantially similar
document has been
issued by the applicable
governmental agency for
the project or subject
phase, and
 All the units in the
building in which the
unit securing the
mortgage is located are
complete, subject to the
installation of buyer
select items, such as
appliances.
6. Project complies with all legal
requirements set forth in Section
B4-2.2-13, Condo Project
Review and Legal Document
Requirements (10/30/09)
{05555341.DOC;2}
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FHLMC (Freddie Mac)
Source/Date
the building in which the
subject unit is located are
complete.
3. Fewer than 90% of the
total number of units in
the project have been
conveyed to the unit
purchasers other than the
developer; or
4. The developer has not
turned control of the
homeowners association
over to the unit owners.
B/Subpart
B4/Chapter
B4-2.2-01 and
Chapter B42.2-09 and B42.2-05 (dated
October 30,
2009).
3. Freddie Mac
Single-Family
Seller/Servicer
Guide/Volume
1/Glossary
and Volume
1/Chapter
42/Section
42.6(Dated
October 9,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA

FNMA (Fannie Mae)
Comprehensive sale and
marketing and transition
summary must be provided
by developer.
For Gut Rehabilitation – the entire
community and common facilities
must be 100% built (except for
interior buyer’s preference items)
and a building permit or its
equivalent is required.
The Condominium Project must be
declared and exist in full compliance
with applicable State law
requirements of the jurisdiction in
which the condominium project is
located and with all other applicable
laws and regulations.
FHA will require the completion
and retention of the following
documents:

Phase I Environmental
Site Assessment (see
Environmental Review
Requirements in Section
1.7 of Guide effective
{05555341.DOC;2}
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FHLMC (Freddie Mac)
Source/Date
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA






New
Communities/Projects
Insurance
Requirements
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
August 30, 2011)
Builder’s Certification
of Plans, Specifications
and Site, Form HUD92541
Builder’s Warranty,
Form HUD-92544
Building Permit
Final C/O
10 year warranty
Inspection report
1. Hazard-Replacement cost
coverage (100% current
replacement cost of
condominium exclusive of
land, foundation, excavation,
and other typical exclusions)
2. Liability
3. Fidelity Insurance for HOA
(for new and established
condominium projects with
20 or more units)-3x
monthly aggregate HOA
dues plus reserve funds
unless State law requires a
maximum amount of
required coverage.
1. Hazard-Replacement cost
coverage
2. Liability-min of $1,000,000
3. Fidelity Bond insurance is
required for communities over
20 units-3 x monthly HOA dues
4. Flood (when applicable)$250,000 per unit
5. If master policy does not include
“All In” coverage including
improvements and betterments,
an HO6 policy is required with
coverage equal to 20% of the
value of the unit
“All In” = insure fixtures,
{05555341.DOC;2}
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1. Hazard-Replacement cost
coverage
2. Liability-min $1,000,000
3. Fidelity Bond(required for
projects with 20 or more
units)-3 x monthly HOA
dues
4. Flood (when applicable)$250,000/unit
5. Earthquake (when
applicable in California)
6. If master policy does not
include “All In” coverage
including improvements
and betterments, an HO6
policy is required with
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.9 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)

improvements, alterations and
If community engages
equipment within the individual
management company,
condominium unit
must provide proof of
fidelity insurance/bond
for the management
company naming
association as oblige in
amount not less than
estimated maximum
funds in custody of
association or
management company.
In no event shall the
amount of coverage be
less than a sum equal to 3
months aggregate
assessments on all units
plus reserve funds unless
State law requires a
maximum amount of
required coverage.
4. Flood (when applicable)
5. Owner is required to obtain
HO-6 policy if the master or
blanket policy does not
include interior unit
coverage, including
replacement of interior
improvements and
{05555341.DOC;2}
9 of 49
FHLMC (Freddie Mac)
coverage equal to 20% of
the value of the unit
“All In” = insure fixtures,
improvements, alterations and
equipment within the individual
condominium unit
Source/Date
B/Subpart
B4/Chapter B42, Section B42.1-05 (dated
October 30,
2009).
3. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
7/Chapter B7-4
(dated October
9, 2009).
4. Freddie Mac
Seller/Service
Guide Chapter
42.2(c) and
58.1 (dated
October 9,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Permitted unless it adversely impacts
the rights of a mortgagee or its assignee
to:
1. Foreclose or take title to a
Condominium Unit pursuant to
the remedies in the Mortgage; or
2. Accept a deed or assignment in
lieu of foreclosure in the event
of default by a mortgagor; or
3. Sell or lease a unit acquired by
the mortgagee or its assignee.
Permitted unless it adversely
impacts the rights of a mortgagee
or its assignee to:
1. Foreclose or take title to a
Condominium Unit
pursuant to the remedies in
the Mortgage; or
2. Accept a deed or
assignment in lieu of
foreclosure in the event of
default by a mortgagor; or
3. Sell or lease a unit
acquired by the mortgagee
or its assignee.
Source/Date
betterment coverage to
insure improvements that the
borrower may have made to
unit.
New
Communities/Projects
Right of First
Refusal
Permitted unless it violates
discriminatory conduct under the
Fair Housing Act regulation in 24
CFR 100.
{05555341.DOC;2}
10 of 49
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.2.2 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Chapter Bf2.2-13 (dated
October 9,
2009).
3. Freddie Mac
Seller/Service
Guide Chapter
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
42.2(e) (dated
October 9,
2009).
New
Communities/Projects
Commercial
Limitations
1. No more than 25% of
property’s total floor area in
the project or in the unit can
be used for commercial
purposes (no exception
exists for proposed, under
construction, newly
converted, or existing
projects under 1 year old).
2. The commercial portion of
the project must be of a
nature that is homogenous
with residential use, which is
free of adverse conditions to
the occupants of the
individual condominium
units.
No more than 20% of the square footage
of the project can be used for
commercial purposes.
{05555341.DOC;2}
11 of 49
No more than 20% of the total
square footage of the project can
be used for non-residential
purposes. No more than 20% of
the income is from sources other
than dues and assessments.
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.3 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-04 (dated
October 30,
2009).
3. Freddie Mac
Seller/Service
Guide Chapter
42.3(d) and (e)
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
(dated October
9, 2009).
New
Communities/Projects
Ownership
Limitations
1. Over 10 Units: No more than
10% of the units may be
owned by one investor,
including all units rented and
leased that a
developers/builder owns.
 Unoccupied and
unsold units owned
by builder/developer
are not considered
investor owned and
are not subject to
above requirement.
 The investor/single
entity individual
owner-occupied unit
is not considered
investor owned and is
not subject to the
above requirement.
 Eligible non-profit
and/or eligible
governmental
housing programs
1. Over 10 Units: No
single entity – the same
individual, investor
group, partnership, or
corporation other than
the developer during the
initial marketing period –
may own more than 10%
of the total units in the
project.
2. Under 10 units: No
single entity can own
more than one unit.
{05555341.DOC;2}
12 of 49
1. Over 10 Units: No more
than 10% of the total
number of units can be
owned by a single entity.
2. Under 10 Units: No single
entity can own more than
one unit.
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.4 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-04 (dated
October 30,
2009.
3. Freddie Mac
Seller/Service
Guide Chapter
42.3(m) (dated
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
New
Communities/Projects
Criteria
Delinquency Rates
FHA
and units in projects
subject to legally
mandated rent
regulations are not
subject to 10%
ownership interest
limitation.
2. Under 10 Units: No single
entity may own more than
one unit within the project.
All units, common elements
and facilities within the
project must be 100%
complete. Only one unit can
be conveyed to non-owner
occupants.
No more than 15% of the total units
can be more than 30 days past due
on the payment of their assessments.
The 15% includes all units
(occupied, investor, bank owned,
vacant).
FNMA (Fannie Mae)
Source/Date
October 9,
2009).
No more than 15% of the total units can
be more than 30 days past due.
An exception to the 15% may be
considered on a case-by-case basis
increasing up to 20% provided the
following requirements are met:

FHLMC (Freddie Mac)
The HOA provides a report
{05555341.DOC;2}
13 of 49
No more than 15% of the total
units can be more than 30 days
past due on the payment of their
assessments.
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.5 of
Guidelines
(Dated June 30,
2011 and
effective June
30, 2011).
2. Fannie Mae
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA



FNMA (Fannie Mae)
for the past six months that
reflects the history of unpaid
assessments.
The HOA current reserve
fund balance and current
operating results
(documented HOA Balance
Sheet and Income/Expense
financial statements dated
less than 90 days at the time
of submission) evidences
excess available funds in the
amount of the outstanding
arrearage.
A review of the HOA
financial statements and
verification of the reserve
account balance reveals that
the HOA has sufficiently
accounted for bad debt and
arrearages.
A current reserve study that
is no greater than 24 months
old supports the sufficiency
of the current HOA
assessments to meet the
project component
replacement needs.
FHLMC (Freddie Mac)
Source/Date
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-04 (dated
October 30,
2009.
3. Freddie Mac
Seller/Service
Guide Chapter
42.6(d) (dated
October 9,
2009).
{05555341.DOC;2}
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FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
If Lender Full Review: At least 70% of
the total units in the project or subject
legal phase must have been conveyed or
be under a bona fide contract for
purchase to owner-occupant principal
residence or second home purchasers.
At least 70% of the total units in
the project (or of a legal phase if
development is in phases) must be
sold or under a bona fide contract
for sale as a principal residence or
second home.
Presale requirement is not applicable For a specific legal phase or phases in a
for existing or Non-Gut
new project, at least 70% of the total
Rehabilitations.
units in the subject legal phase(s),
considered together with all prior legal
The pre-sale percentage must be
phases, must have been conveyed or be
documented as follows:
under contract to be sold to owneroccupant principal or second home
1. Copies of sales
purchasers.
For a specific legal phase or
phases in a new project, at least
70% of the total units in the
subject legal phase must be
conveyed and or under agreement
to owner-occupied principal or
second home purchasers. In
addition, at least 70% of the

Source/Date
The HOA provides evidence
of actions to collect the
unpaid arrearages, including
legal action, execution of
payment plans, or other
similar efforts.
The exception terminates with
the expiration of the current
condominium project approval.
New
Communities/Projects
Pre-Sale
Requirements
At least 30% of the total units must
be sold prior to endorsement of a
mortgage on any unit. Valid presales
include an executed sales agreement
and evidence that a lender is willing
to make the loan.
{05555341.DOC;2}
15 of 49
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 3.4 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
agreements and
evidence that a
mortgagee is willing
to make the loan;
2. Evidence that units
have closed and are
occupied; OR
3. Information from a
developer/builder
that lists all of the
units already sold,
under contract, or
closed (e.g. a
spreadsheet, chart, or
listing used for the
company’s own
tracking purposes)
that is accompanied
by a signed
certification from the
developer.
FNMA (Fannie Mae)
A project of one building cannot have
more than one legal phase.
If Condo Project Manager (CPM) At
least 51% of the total units in the project
or subject legal phase must have been
conveyed or be under a bona fide
contract for purchase to owner-occupant
principal residence or second home
purchasers.
For a specific legal phase or phases in a
new project, at least 51% of the total
units in the subject legal phase(s),
considered together with all prior legal
phases, must have been conveyed or be
under contract to be sold to owneroccupant principal or second home
purchasers.
A project of one building cannot have
more than one legal phase.
Secondary residences can only be
included if it meets the requirements
of 24 CFR 203.18(f)(2). (Effective
8/30/11)
{05555341.DOC;2}
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FHLMC (Freddie Mac)
number of units within the phase,
considered together with all prior
legal phases, must have been
conveyed or be under contract to
be sold to owner-occupant
principal or second home
purchasers.
A project of one building cannot
have more than one legal phase.
Source/Date
Guide/Part
B/Subpart
B4/Section B42.2-04 and B42.2-05 (dated
October 30,
2009).
3. Freddie Mac
Seller/Service
Guide Chapter
42/Section
42.6(b) (dated
October 9,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
New
Communities/Projects
Criteria
FHA
FNMA (Fannie Mae)
Owner Occupancy
Requirements
At least 30% of the declared units of
a project must be owner occupied or
sold to owners who intend to occupy
the units. One year after the first
unit conveyance, the project
requirement is at least 50% owneroccupancy of the declared units.
If Lender Full Review:
1. At least 70% of the units in the
project have been conveyed or
are under contract to purchasers
(other than the developer or
successor to the developer) who
will occupy their unit as a
Primary Residence or second
home.
2. 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 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 will occupy their
unit as a Primary Residence or
second home).
3. 2-4 Unit Condominium: All but
one unit must be conveyed to
owner-occupant principal
residence or second home
*Secondary residences can only be
considered “owner occupied” if it
meets the requirements of 24 CFR
203.18(f)(2).
*Units sold to owners who intend to
occupy the units may only be
considered “owner-occupant” if it
was a valid presale.
If Condo Project Manager (CPM):
1. At least 51% of the units in the
project have been conveyed or
{05555341.DOC;2}
17 of 49
FHLMC (Freddie Mac)
1. At least 70% of the units in
the project have been
conveyed or are under
contract to purchasers
(other than the developer
or successor to the
developer) who will
occupy their unit as a
Primary Residence or
second home.
2. 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 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 will
occupy their unit as a
Primary Residence or
second home).
Source/Date
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 3.5 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Chapter B42.2-05 (Dated
October 30,
2009).
3. Freddie Mac
Seller/Service
Guide Chapter
42.6(b) (dated
October 9,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
are under contract to purchasers
(other than the developer or
successor to the developer) who
will occupy their unit as a
Primary Residence or second
home.
New
Communities/Projects
Limitations on
Legal Phasing
Legal Phasing is permitted for
condominium processing as follows.
For Vertical Buildings, legal
phasing is acceptable if:
2. At least 51% 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 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 will occupy their
unit as a Primary Residence or
second home).
3. 2-4 Unit Condominium: All but
one unit must be conveyed to
owner-occupant principal
residence or second home
Single buildings can have no more than N/A
one legal phase. Owner
occupancy/presale is based on the entire
project or subject legal phase.
{05555341.DOC;2}
18 of 49
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
1. The floors are legally
phased in groupings
of no less than five
consecutive
residential floors;
except where the
owner provides
documentation that a
group of less than
five floors is
required, e.g. vertical
building contains
seven floors; and
2. At least a temporary
certificate of
occupancy has been
obtained and all
common areas and
amenities have been
completed; and
3. A third party
completion bond has
been obtained.
FHLMC (Freddie Mac)
Source/Date
Section 2.1.13
of Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-04 and B42.2-05 (dated
October 30,
2009).
For purposes of calculating the
owner-occupancy percentage and
FHA concentration:
1. On multi-phased projects the
{05555341.DOC;2}
19 of 49
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
owner-occupancy percentage
is calculated on the first
declared phase and
cumulatively on subsequent
phases if the ownership of
the condominium project
remains the same.
2. If multi-phasing includes
separate ownership per
phase, each phase is
calculated individually.
3. In single-phase
condominium project
approval requests, all units
are used in the denominator
when calculating the 50%
owner-occupancy
percentage.
New
Communities/Projects
Concentration of
Loans
1. Projects With 3 or Less
Units. No more than one
unit can be encumbered with
FHA insurance.
NA
N/A
2. Projects With 4 or More
Units. No more than 50% of
the total units can be
encumbered with FHA
insurance.
{05555341.DOC;2}
20 of 49
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 3.6 of
Guide (Dated
June 30, 2011
and effective
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
June 30, 2011).
*The jurisdictional HOC may
grant an exception to allow
insurance of a mortgage in a
project with an FHA
concentration FOR EXISTING
AND NON-GUT
REHABILITIATIONS ONLY
greater than 50% for up to 100%
if the project meets all of the
requirements for project
approval and the following
additional requirements:
 The project has at
least 4 units.
 The project is 100%
complete and
construction has been
completed for at least
one year.
 100% units have
been sold and no
entity owns more
than 10% of the units
in project (or more
than one unit if
project is fewer than
10 units).
{05555341.DOC;2}
21 of 49
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA



FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
The project’s budget
provides for the
funding of
replacement reserves
for capital
expenditures and
deferred maintenance
in an account
representing at least
10% of the budget;
Control of the HOA
has been transferred
to owners;
Owner occupancy
ratio is at least 50%;
The exception terminates
with the expiration of the
current project approval.
New
Communities/Projects
Reserve Study
1. In cases where the budget
documents do not meet
FHA’s budget standards, the
mortgagee may request a
reserve study to assess the
financial stability of the
N/A
{05555341.DOC;2}
22 of 49
N/A
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
project. The reserve study
cannot be more than 24
months old.
New
Communities/Projects
Transfer of Control
New
Communities/Projects
Budget
Must occur no later than the latest of
the following: (1) 120 days after the
date by which 75% of the units have
been conveyed to the unit
purchasers; (2) Three years after
completion of the project evidenced
by the first conveyance to a unit
purchaser; or (3) the time frame
established under state or local
condominium laws if specific
provisions regarding transfer of
control exist.
Mortgagees must review the
homeowners’ association proposed
budget. The review must determine
that the budget is adequate and:
1. Includes allocations/line
items to ensure sufficient
funds are available to
maintain and preserve all
amenities and features
Source/Date
Section 2.1.6 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
N/A
The budget must:
1. be “adequate” (i.e., it includes
allocations for line items
pertinent to the type of condo);
2. provide for the funding of
replacement reserves for capital
expenditures and deferred
maintenance at least 10% of the
budget; and
3. provide adequate funding for
{05555341.DOC;2}
23 of 49
N/A
1. At least 10% of the budget
must provide funding for
replacement reserves for
capital expenditures and
deferred maintenance
based on the project’s age
and remaining life, and on
the quality and
replacement cost of major
items comprising the
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 1.9 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.6 of
Guide (Dated
June 30, 2011
and effective
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
unique to the condominium
project;
2. Provides for the funding of
replacement reserves for
capital expenditures and
deferred maintenance in an
account representing at least
10% of the budget; and
3. Provides adequate funding
for insurance coverage and
deductibles.
FNMA (Fannie Mae)
insurance deductibles.
In cases where the budget
documents do not meet these
standards, a reserve study (not more
than 24 month old) may be
requested to assess the financial
stability of the project.
New
Communities/Projects
Special
Assessments
Project submittals must contain a
signed and dated explanation for any
special assessment from the builder,
developer, sponsor, HOA or
management company answering
the following:
 What is the purpose of the
assessment;
 Does the assessment impact
the marketability of any of
{05555341.DOC;2}
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FHLMC (Freddie Mac)
common elements
including the heating
system, elevators and roof.
There must be adequate
funding for insurance
deductibles.
2. There must be appropriate
allocations for line items
pertinent to the type and
status of the condominium
project.
3. If the project was recently
converted, the developer
must have initially funding
a working capital fund in
an amount consistent with
the estimated remaining
life of the individual
common elements
1. U.S. Department of
Housing and Development
Mortgagee Letter 2011-22,
Section 2.1.7 of the Guide
(Dated June 30, 2011 and
effective June 30, 2011).
Source/Date
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-04 (dated
October 30,
2009).
3. Freddie Mac
Seller/Service
Guide Chapter
42.6(c) (dated
October 9,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
New
Communities/Projects
Criteria
Pending Litigation
FHA
FNMA (Fannie Mae)
the units;
 Have other special
assessments been required (if
yes, explanation);
 When is the assessment to be
paid;
 How is overall financial
stability of the project
impacted by the assessment;
and
 What impact will the
assessment have on the
future value and
marketability of the property.
Project submittals must include a
N/A
signed and dated explanation
regarding pending litigation (does
not include routine foreclosure)
from the attorney representing the
builder, developer, sponsor, HOA or
management company addressing
the following:
 Reason for pending
litigation;
 Anticipated
settlement/judgment date, if
any;
 Is there sufficient insurance
{05555341.DOC;2}
25 of 49
FHLMC (Freddie Mac)
N/A
Source/Date
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.8 of
the Guide
(Dated June 30,
2011 and
effective June
30, 2011).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
New
Communities/Projects
Criteria
FHA
FNMA (Fannie Mae)
coverage to pay out a
settlement/judgment without
affecting financial stability
of project;
 Impact of action on future
solvency of the HOA;
 Ability for owners to transfer
title affected;
 Impact on owners rights.
Affordable Housing Condominium projects containing
N/A
affordable housing programs
operated through governmental
agencies and/or eligible nonprofits is
eligible for FHA approval if:


The government or eligible
nonprofit program restriction
meets the exceptions defined
in 24 CFR 203.41(c) and (d);
or
The recorded condominium
declarations contain the
affordable housing program
requirements, including
defining the specific units
that are covered under the
program. If no such
provision exists, the
{05555341.DOC;2}
26 of 49
FHLMC (Freddie Mac)
N/A
Source/Date
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 1.8.7 of
the Guide
(Dated June 30,
2011 and
effective June
30, 2011).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
declaration must be amended
to reflect the specific units.
New
Communities/Projects
Project
Certification
Project Certifications (Appendix A
of Guide) are required with each
submittal for project approval,
including annexation requests. The
certification must be submitted on
company letterhead and must be
signed by an association
representative, or its authorized
representative (i.e. management
company, project consultant, or
attorney).
N/A
The certification requires the signing
party to certify the following:



They have reviewed the
project and it meets all state
and local condominium laws
and all FHA condominium
approval requirements.
To the best of his or her
knowledge and belief, the
information and statements
contained in the application
are true and correct.
The submitter has no
{05555341.DOC;2}
27 of 49
N/A
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.4 of
the Guide
(Dated June 30,
2011 and
effective
August 30,
2011).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
knowledge of circumstances
or conditions that might have
an adverse effect on the
project or cause a mortgage
secured by a unit in the
project to become delinquent
including but not limited to:
o Defects in
construction;
o Substantial disputes
or dissatisfaction
among unit owners
about the operation
the project of the
owner’s association;
o Disputes concerning
unit owner’s right,
privileges, and
obligations.
The submitter must also
acknowledge and agree that the
submitter is under a continuing
obligation to inform HUD if any
material information compiled for
the review and acceptance of this
project is no longer true and correct.
{05555341.DOC;2}
28 of 49
FHLMC (Freddie Mac)
Source/Date
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Existing /Established
Communities/Projects
Existing /Established
Communities/Projects
Criteria
Eligibility
Requirements
FHA
FNMA (Fannie Mae)
The project must consist of two or
more units.
1. At least 90% of the total units
in the project have been
conveyed to the unit purchasers.
Project is fully completed and is
over one year old.
2. Project is 100% complete,
including all units and common
elements.
3. Project is not subject to
additional phasing or
annexation.
4. Control of the homeowners’
association has been turned
over to the unit owners.
5. All facilities related to the
project are owned by the unit
owners or the homeowners
association. The Developer
cannot retain any ownership
interest in any of the facilities
related to the project.
6. The amenities and facilities
(including parking and
recreational facilities) cannot be
subject to a lease between the
unit owners or the homeowners
association and another party.
In the case of legally phased project,
it is defined as date that the initial
phase has been completed and is
over one year old. This includes
multiple buildings within one phase
where the final building has been
completed and the certificate of
occupancy has been issued for over
one year.
The Condominium Project must be
declared and exist in full compliance
with applicable State law
requirements of the jurisdiction in
which the condominium project is
located and with all other applicable
laws and regulations.
Entire project including the common
{05555341.DOC;2}
29 of 49
FHLMC (Freddie Mac)
1. At least 90% of the total
units have been conveyed
to the unit purchasers other
than the developer
2. The unit owners control
the homeowners
Association.
3. All units and common
elements are complete and
not subject to any
additional phasing or
additions
Source/Date
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 1.5 of
the Guide
(Dated June 30,
2011 and
effective
August 30,
2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Chapter B42.2-01 and
Chapter B4-2.206 (dated
October 30,
2009).
3. Freddie Mac
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
facilities must be 100% complete
FNMA (Fannie Mae)
7. Separate metering of individual
units is recommended but not
generally required.
8. No single entity may own more
than 10% of the total units in
the project, or in the case of a
project under 10 units, no single
entity may own more than one
unit within the project.
9. The project must be
demonstrably well managed,
and if professionally managed,
the management contract shall
be for a reasonable term and
contain a termination provision
that does not require a penalty
payment or advance notice of
more than 90 days.
10. The project must be located on
one contiguous parcel of land
(but may be divided by a public
street).
11. Structures within the project
must be within a reasonable
distance from each other.
12. Common Elements and
facilities (such as recreational
facilities and parking) must be
consistent with the nature of the
{05555341.DOC;2}
30 of 49
FHLMC (Freddie Mac)
Source/Date
Single-Family
Seller/Servicer
Guide/Volume
1/Glossary and
Volume
1/Chapter
42/Section
42.5(Dated
October 9,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
project and competitive in the
marketplace.
13. 2-4 Unit Projects: All but one
unit in the project must have
been conveyed to owneroccupant principal residence or
second home purchasers
14. All units, common elements,
and facilities within the project
– including those that are
owned by any master
association – must be 100%
complete (if a two-to four-unit
project).
15. The units in the project must be
owned in fee simple or
leasehold, and the unit owners
must be the sole owners of, and
have the rights to the use of, the
project’s facilities, common
elements, and the limited
common elements
Existing /Established
Communities/Projects
Project Approval
Requirements
Existing /Established
Communities/Projects
Concentration of
Loans
1. Projects With 3 or Less
Units. No more than one
NA
N/A
{05555341.DOC;2}
31 of 49
1. U.S.
Department of
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
unit can be encumbered with
FHA insurance.
FHLMC (Freddie Mac)
Source/Date
Housing and
Development
Mortgagee
Letter 2011-22,
Section 3.6 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Projects With 4 or More
Units. No more than 50% of
the total units can be
encumbered with FHA
insurance.
Exceptions to 50% Concentration
Level. The FHA concentration level
may be increased up to 100% if the
project meets all of the basic
condominium standards plus the
additional items stated below:
1. The project is 100%
complete and construction
has been completed for at
least one year, as evidenced
by issuance of the final or
temporary/conditional
certificate of occupancy for
the last unit conveyed;
2. 100% of the units have been
sold and no entity owners
more than 10% of the units
in the project (for projects
with fewer than 10 units,
single entity may own no
{05555341.DOC;2}
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FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
more than 1 unit);
3. The project’s budget
provides for funding of
replacement reserves for
capital expenditures and
deferred maintenance in an
amount representing at least
10% of the budget;
4. Control of the homeowners
association has transferred to
the owners; and
5. The owner-occupancy ratio
is at least 50%.
6. The exception terminates
with the expiration of the
current project approval.
Note: New construction and GutRehabilitation conversions are not
eligible for this exception.
Existing /Established
Communities/Projects
Commercial
Limitations
1. No more than 25% of
property’s total floor area in
the project or a Unit can be
used for commercial
purposes (exceptions can be
No more than 20% of the total square
footage in the project can be used for
nonresidential space.
{05555341.DOC;2}
33 of 49
1. No more than 20% of the
total square footage of the
project can be used for
non-residential purposes;
and.
1. U.S.
Department of
Housing and
Development
Mortgagee
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
requested on case-by-case
basis for up to 35% of
property’s or Units total
floor area).
2. No more than 20% of
income can be from
sources other than
dues/assessments.
Requirements for exceptions:




FHLMC (Freddie Mac)
Requests must be
submitted as part of
the approval, reapproval, or
recertification
process as an HRAP
application.
Proposed, under
construction, existing
projects less than one
year old and newly
converted projects
are ineligible.
Project must be
100% complete for at
least one year.
No exception will be
granted where the
nonresidential/commerci
al space use is more
{05555341.DOC;2}
34 of 49
Source/Date
Letter 2011-22,
Section 2.1.3
(Dated June 30,
2011 and
effective June
30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-09 (dated
October 30,
2009).
3. Freddie Mac
Single-Family
Seller/Servicer
Guide/Volume
1/Chapter
42/Section 42.3
(Dated October
9, 2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA



FNMA (Fannie Mae)
than 35% of the
property’s total floor
area;
Control of the HOA
has been transferred
to the owners.
Granting an
exception does not
change the
requirement that the
project’s use remains
primarily residential,
homogenous with
residential use and is
free of adverse
conditions to the
occupants of the
units.
The exception
terminates with the
expiration of the
current project
approval.
2. The commercial portion of
the project must be of a
nature that is homogenous
with residential use, which is
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FHLMC (Freddie Mac)
Source/Date
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Existing /Established
Communities/Projects
Criteria
Occupancy
Restrictions
FHA
free of adverse conditions to
the occupants of the
individual condominium
units.
3. Live/Work Projects must
meet the following
requirements:
 Must be approved via
HRAP.
 Condominium
Declaration must state
the work (nonresidential) space per
unit cannot exceed 25%
of the unit’s total floor
area.
 The non-residential work
space may not exceed
25% of the project’s total
floor area; and
 The work non-residential
use must be subordinate
to the unit’s residential
use and character.
At least 50% of the total units of a
project must be owner occupied or
sold to owners who intend to occupy
the units.
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
2-4 Unit Projects:
2-4 Unit Projects:
All but one unit must be conveyed to
owner occupant principal residence or
All but one unit must be conveyed
to owner occupied principal
{05555341.DOC;2}
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Source/Date
1. U.S.
Department of
Housing and
Development
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
second home
*A secondary residence can only be
considered “owner-occupied” if it
meets the requirements of 24 CFR
203.18(f)(2).
*Units sold to owners who intend to
occupy the units may only be
considered “owner-occupant” if it
was a valid presale.
*Restrictions on Leasing:
Condominium Declaration can
restrict owner’s ability to lease their
unit if the restrictions meet one or
more of the following criteria:



FHLMC (Freddie Mac)
residence or second home
Projects greater than 4 units
Projects greater than 4 units
Primary Residence or Second Home:
There is no limitation on number of
investor units if subject is a principal
residence or a second home.
Investment Property: At least 51% of
the total units in the project must be
conveyed to purchasers as principal
residences or second homes.
All leases must be in writing
and subject to the declaration
and by-laws of the
condominium project.
The condominium
association may request and
receive a copy of the
sublease or rental agreement.
The condominium
association may request the
name(s) of all tenants
{05555341.DOC;2}
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Primary Residence or Second
Home : There is no limitation on
number of investor units if subject
is a principal residence or a second
home.
Investment Property: At least
51% of the total units in the
project must be conveyed to
purchasers as principal residences
or second homes.
Source/Date
Mortgagee
Letter 2011-22,
Sections 1.8.9
and 3.5 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-06 and B42.2-07 (dated
October 30,
2009).
3. Freddie Mac
Single-Family
Seller/Servicer
Guide/Volume
1/Chapter
42/Section
42.5(b) (Dated
October 9,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA




FNMA (Fannie Mae)
including the tenant’s family
members who will occupy
the unit.
Unit owners are prohibited
from leasing their units for
an initial term of less than 30
days.
The condominium
association may establish a
maximum allowable lease
term, e.g. six months, twelve
months, etc.
The condominium
association may establish a
maximum number of rental
units within the project;
however, the percentage of
rental units may not exceed
the current FHA
condominium project owneroccupancy requirement (i.e.
currently 50%).
The condominium
association may not require
that a prospective tenant be
approved by the
condominium association
and/or its agent(s), including
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FHLMC (Freddie Mac)
Source/Date
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
No more than 15% of the total units in
an attached condominium project can be
30 days or more past due on
assessments.
No more than 15% of the total
number of units in a project can be
30 days or more past due on
assessments.
Source/Date
but not limited to meeting
creditworthiness standards.
Existing /Established
Communities/Projects
Association
Requirements
Assessments/Delin
quency
No more than 15% of the total units
can be more than 30 days past due
on the payment of their assessments
(does NOT include late fees or
administration charges). ALL units
included in delinquency ratio
regardless of ownership.
*exception to 15% can be requested
for up to 20% delinquency on caseby-case basis. Additional
documentation may be required as
follows:
1. Report for past 6 months that
reflects history of unpaid
assessments.
2. The HOA current reserve
fund balance and balance
sheet/financial statements
evidences excess available
{05555341.DOC;2}
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1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.5 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Section B42.2-06 (dated
October 30,
2009).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
funds in the amount of the
outstanding arrearage.
3. HOA financial statements
demonstrate the HOA has
sufficiently accounted for
bad debt and arrearages.
4. A current reserve study that
is no greater than 24 months
old supports the sufficiency
of the current HOA
assessments to meet project
component replacement
needs.
5. HOA must provide evidence
of actions to collect unpaid
arrearages.
Source/Date
3. Freddie Mac
Seller/Service
Guide Chapter
42.5(d) (dated
October 9,
2009).
The exception terminates with
the expiration of the current
condo project approval.
Existing /Established
Communities/Projects
Insurance
1. Hazard-Replacement cost
coverage (100% current
replacement cost of
condominium exclusive of
land, foundation, excavation,
and other typical exclusions)
2. Liability
1. Hazard-Replacement
cost coverage
2. Liability-min $1,000,000
3. Fidelity (20 units or
more)-3 x monthly HOA
dues
4. Flood-(if applicable) of
{05555341.DOC;2}
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1. Hazard-Replacement cost
coverage
2. Liability-min $1,000,000
3. Fidelity (required for
projects with 20 or more
units)-3 x monthly HOA
dues
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.9
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
3. Fidelity Insurance by HOA
(for new and established
condominium projects with
20 or more units) - 3x
monthly aggregate HOA
dues plus reserve funds
unless State law mandates a
maximum dollar amount of
required coverage.
 If community engages
management company,
must provide proof of
fidelity insurance
coverage/bond for the
management company
naming association as
obligee in amount not
less than estimated
maximum funds in
custody of association or
management company,
and in no event shall the
amount of coverage be
less than a sum equal to 3
months aggregate
assessments plus reserve
funds unless State law
requires a maximum
amount of required
FNMA (Fannie Mae)
$250,000 per unit
5. If master policy does not
include “All In”
coverage including
improvements and
betterments, an HO6
policy is required with
coverage equal to 20% of
the value of the unit
“All In” = insure fixtures,
improvements, alterations and
equipment within the individual
condominium unit
{05555341.DOC;2}
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FHLMC (Freddie Mac)
4. Flood (when applicable)$250,000 per unit
5. Earthquake (when
applicable in California)
6. If master policy does not
include “All In” coverage
including improvements
and betterments, an HO6
policy is required with
coverage equal to 20% of
the value of the unit
“All In” = insure fixtures,
improvements, alterations and
equipment within the individual
condominium unit
Source/Date
and 3.7 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
B4/Chapter B42, Section B42.1-05 (dated
October 30,
2009).
3. Fannie Mae
Single
Family/2009
Selling
Guide/Part
B/Subpart
7/Chapter B7-4
(dated October
9, 2009).
4. Freddie Mac
Seller/Service
Guide Chapter
42.2(c) and
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
coverage.
4. Flood (when applicable)
5. Owner is required to obtain
HO-6 policy if the master or
blanket policy does not
include interior unit
coverage, including
replacement of interior
improvements and
betterment coverage to
insure improvements that the
borrower may have made to
unit.
Existing /Established
Communities/Projects
Budget
Mortgagees must review the
homeowners’ association existing
budget. The review must determine
that the budget is adequate and:
1. Includes allocations/line
items to ensure sufficient
funds are available to
maintain and preserve all
amenities and features
unique to the condominium
project;
2. Provides for the funding of
replacement reserves for
capital expenditures and
Source/Date
58.1 (dated
October 9,
2009).
The budget must:
1. Be adequate (i.e. includes
allocations for line items
pertinent to the type of condo).
2. Provide for funding of
replacement reserves for capital
expenditures and deferred
maintenance equal to at least
10% of the budget.
{05555341.DOC;2}
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1. The budget must contain
appropriate allocations for
line items pertinent to the
type and status of the
Condominium Project.
2. At least 10% of the
operating budget must
provide funding for
replacement reserves for
capital expenditures and
deferred maintenance
based on the project’s age
and remaining life, and the
quality and replacement
cost of major Common
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.6 of
Guide (Dated
June 30, 2011
and effective
June 30, 2011).
2. Fannie Mae
Single
Family/2009
Selling
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
deferred maintenance in an
account representing at least
10% of the budget; and
3. Provides adequate funding
for insurance coverage and
deductibles (pursuant to
Section VI, Insurance
Requirements).
Investor
Limitations
FHLMC (Freddie Mac)
Elements.
3. There must be adequate
funding for insurance
deductibles.
In cases where the budget
documents do not meet these
standards, a reserve study (no older
than 24 months) may be requested to
assess the financial stability of the
project.
No more than 10% of the Units can
be owned by one investor/entity
(single or multiple owner entities) –
including all rented and leased units
that a developer/builder owns. For
projects with 10 or fewer units, no
single investor/entity may own more
than one unit.
Source/Date
Guide/Part
B/Subpart
B4/Section B42.2-06 (dated
October 30,
2009).
3. Freddie Mac
Seller/Service
Guide Chapter
42.5(c) (dated
October 9,
2009).
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.4
(Dated June 30,
2011 and
effective June
30, 2011).
*If investor/single entity individual
unit is owner occupied, the unit not
considered investor owned.
*Unoccupied and unsold units
{05555341.DOC;2}
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FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Existing /Established
Communities/Projects
Criteria
FHA
FNMA (Fannie Mae)
owned by developer not considered
investor owned.
*Non-profit owned units and
eligible governmental housing
programs not subject to 10%
ownership limitation.
*Units in projects subject to legally
mandated rent regulations not
subject to investor requirements.
Affordable Housing Condominium projects containing
N/A
affordable housing programs
operated through governmental
agencies and/or eligible nonprofits is
eligible for FHA approval if:


The government or eligible
nonprofit program restriction
meets the exceptions defined
in 24 CFR 203.41(c) and (d);
or
The recorded condominium
declarations contain the
affordable housing program
requirements, including
defining the specific units
that are covered under the
program. If no such
provision exists, the
declaration must be amended
{05555341.DOC;2}
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FHLMC (Freddie Mac)
N/A
Source/Date
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 1.8.7 of
the Guide
(Dated June 30,
2011 and
effective June
30, 2011).
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
Existing /Established
Communities/Projects
Special
Assessments
Existing /Established
Communities/Projects
Pending Litigation
FHA
FNMA (Fannie Mae)
to reflect the specific units.
Project submittals must contain a
N/A
signed and dated explanation for any
special assessment from the builder,
developer, sponsor, HOA or
management company answering
the following:
 What is the purpose of the
assessment;
 Does the assessment impact
the marketability of any of
the units;
 Have other special
assessments been required (if
yes, explanation);
 When is the assessment to be
paid;
 How is overall financial
stability of the project
impacted by the assessment;
and
 What impact will the
assessment have on the
future value and
marketability of the property.
Project submittals must include a
N/A
signed and dated explanation
regarding pending litigation (does
{05555341.DOC;2}
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FHLMC (Freddie Mac)
Source/Date
N/A
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.1.7 of
the Guide
(Dated June 30,
2011 and
effective June
30, 2011).
N/A
1. U.S.
Department of
Housing and
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
not include routine foreclosure)
from the attorney representing the
builder, developer, sponsor, HOA or
management company addressing
the following:
Development
Mortgagee
Letter 2011-22,
Section 2.1.8 of
the Guide
(Dated June 30,
2011 and
effective June
30, 2011).

Existing /Established
Communities/Projects
Recertification
Requirements
Reason for pending
litigation;
 Anticipated
settlement/judgment date, if
any;
 Is there sufficient insurance
coverage to pay out a
settlement/judgment without
affecting financial stability
of project;
 Impact of action on future
solvency of the HOA;
 Ability for owners to transfer
title affected;
 Impact on owners rights.
Project approvals expire every 2
years.
Source/Date
N/A
If project approved prior to January
1, 2000 full project approval is
required (Appendix E-1 of Guide to
be submitted).
{05555341.DOC;2}
46 of 49
N/A
1. U.S.
Department of
Housing and
Development
Mortgagee
Letter 2011-22,
Section 2.3 of
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
FHLMC (Freddie Mac)
Source/Date
the Guide
(Dated June 30,
2011 and
effective June
30, 2011).
If project approved after January 1,
2000, project is eligible for recertification (Appendix E-2 of
Guide to be submitted).
Recertification packets can be
submitted by mortgagees, builders,
developers, HOA’s, management
companies, or an attorney or project
consultant who submits on behalf of
one the above parties.

Existing /Established
Communities/Projects
Project
Certification
Recorded documents must
be submitted.
 Annexations cannot be
reviewed and approved until
re-certification has been
completed.
 Recertification must include
all legal phases approved as
of review date, regardless f
previous approval date of
phase.
Project Certifications (Appendix A
of Guide) are required with each
submittal for project approval,
including annexation requests. The
N/A
{05555341.DOC;2}
47 of 49
N/A
1. U.S.
Department of
Housing and
Development
FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
certification must be submitted on
company letterhead and must be
signed by an association
representative, or its authorized
representative (i.e. management
company, project consultant, or
attorney).


Source/Date
Mortgagee
Letter 2011-22,
Section 2.4 of
the Guide
(Dated June 30,
2011 and
effective
August 30,
2011).
The certification requires the signing
party to certify the following:

FHLMC (Freddie Mac)
They have reviewed the
project and it meets all state
and local condominium laws
and all FHA condominium
approval requirements.
To the best of his or her
knowledge and belief, the
information and statements
contained in the application
are true and correct.
The submitter has no
knowledge of circumstances
or conditions that might have
an adverse effect on the
project or cause a mortgage
secured by a unit in the
project to become delinquent
including but not limited to:
{05555341.DOC;2}
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FHA, FANNIE MAE AND FREDDIE MAC GUIDELINES AND ELIGIBILITY REQUIREMENTS
As of March 8, 2016
Type of
Community/Project
Criteria
FHA
FNMA (Fannie Mae)
o Defects in
construction;
o Substantial disputes
or dissatisfaction
among unit owners
about the operation
the project of the
owner’s association;
o Disputes concerning
unit owner’s right,
privileges, and
obligations.
The submitter must also
acknowledge and agree that the
submitter is under a continuing
obligation to inform HUD if any
material information compiled for
the review and acceptance of this
project is no longer true and correct.
{05555341.DOC;2}
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FHLMC (Freddie Mac)
Source/Date