Conventional Condominium Review Services

Our Project Review Specialists take pride in providing timely and thorough Condominium Project Reviews, with a 1-2 business day turn-around time (depending on volume.)

Fannie Mae and Freddie Mac

A Fannie Mae and Freddie Mac condo review is a process that assesses the eligibility of condominium projects for financing by Fannie Mae and Freddie Mac, two government-sponsored enterprises in the United States. These reviews evaluate various factors, such as the project’s financial stability, insurance coverage, legal compliance, and overall marketability.

Fannie Mae and Freddie Mac have specific guidelines and requirements for condo projects to be eligible for their financing. The reviews help ensure that the condominium project meets these criteria and is considered a safe investment for lenders.

The review process involves evaluating documents and information the condo project provides, such as financial statements, governing documents, budgets, and insurance policies. The goal is to determine if the project meets the necessary standards and poses an acceptable level of risk for lenders.

Condo reviews are essential for buyers and lenders as they assure that the project meets specific standards and can maintain its value over time. These reviews contribute to the housing market’s stability and help protect the interests of both borrowers and lenders.

Requirements For A Condo To Be Considered For Approval

Full Reviews

A full condo approval review refers to a comprehensive evaluation of a condominium project by a lender or mortgage insurer to determine if it meets the eligibility criteria for financing. This type of review typically follows specific guidelines set by organizations like Fannie Mae, Freddie Mac, or the Federal Housing Administration (FHA).

During a full condo approval review, various aspects of the condominium project are assessed. These may include:

Financial Stability

The review thoroughly analyzes the financial health of the condominium association, delving into various aspects such as its budget allocation, management of reserve funds for future needs, and the extent and adequacy of insurance coverage to safeguard against unforeseen events.

Legal Compliance

The condo documents, including the bylaws, covenants, conditions, and restrictions (CC&Rs), undergo thorough scrutiny to verify their alignment with specific local laws, regulations, and guidelines. This meticulous examination is crucial to guaranteeing legal compliance and adherence to the established standards within the community.

Property Management

The review thoroughly evaluates the management practices employed by the condominium association. It aims to assess whether the association is effectively upholding the property’s maintenance standards and meeting the needs of its residents.

Owner-Occupancy Ratio

Lenders frequently stipulate a specific percentage of owner-occupants in a condominium development to ensure the project’s stability and value. The review process serves to confirm that the project aligns with this crucial requirement, which plays a significant role in the lending process and the overall success of the condominium project.

Insurance Coverage

The review has verified that the condominium project possesses suitable insurance coverage, encompassing comprehensive property insurance to safeguard against various risks and liability coverage to protect against potential legal claims and damages. This comprehensive insurance coverage ensures that the project is adequately protected in diverse scenarios and provides peace of mind to stakeholders involved in the endeavor.

Delinquency Rates

The review assesses the percentage of homeowners who are delinquent on their dues or assessments, which is crucial because such delinquencies can significantly affect the financial stability of the project. It is important to closely monitor these metrics to proactively address any potential challenges that may arise and ensure the project’s long-term financial health and sustainability.

The purpose of a full condo approval review is to ensure that the condominium project meets the necessary criteria for FHA condo approval financing. It helps lenders assess the risk associated with lending on a particular property and protects the interests of both the borrowers and the lenders.

Limited Reviews

A limited condo review, also known as a streamlined review, is a less comprehensive evaluation of a condominium project by a lender or mortgage insurer. Unlike a full condo approval review, a limited review involves a simplified assessment of specific criteria to determine if the project meets the eligibility requirements for financing.

During a limited condo review, the lender or mortgage insurer typically focuses on key aspects of the condominium project, including:

Financial Stability

The financial health of the condominium association should be regularly reviewed to ensure its stability and sustainability. This review should encompass various factors, including but not limited to the examination of the current budget allocations, assessment of reserve funds to handle unforeseen expenses, and a comprehensive evaluation of the insurance coverage to mitigate potential risks and liabilities.

Conducting a thorough analysis of these financial aspects is crucial to maintaining the overall well-being and operational efficiency of the condominium association.

Legal Compliance

The review confirms that the condominium documents, including the bylaws (which outline the rules and regulations governing the condo community) and the CC&Rs (Covenants, Conditions, and Restrictions that dictate property use and maintenance), align with the pertinent local laws and regulations in place to ensure legal compliance and adherence.

Owner-Occupancy Ratio

Lenders may still take into account the percentage of owner-occupants in the project when assessing loan applications. However, the stipulations regarding this aspect might be more lenient in comparison to a comprehensive review process.

Insurance Coverage

The limited review process involves a thorough assessment to confirm that the condominium project possesses adequate insurance coverage. This encompasses not only property insurance but also liability coverage, ensuring comprehensive protection for all stakeholders involved in the project.

A limited condo review aims to expedite the underwriting process for certain condominium projects that meet specific eligibility criteria. It allows lenders to assess the risk associated with financing a property without conducting a more time-consuming and thorough review.

It’s important to note that the specific requirements and guidelines for limited condo reviews can vary among lenders and mortgage insurers.

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Fannie Mae PERS Approval Reviews

Fannie Mae PERS condo reviews pertain to the Project Eligibility Review Service (PERS) offered by Fannie Mae. This service acts as a facilitator for lenders to submit various types of condominium projects—whether new, newly converted, or established— to Fannie Mae for a comprehensive eligibility evaluation.

During the PERS review process, lenders are required to provide a range of project details to Fannie Mae. These include financial statements, legal documentation, budgets, insurance coverage specifics, and other pertinent information crucial for the assessment. Fannie Mae meticulously examines the submitted data against its set guidelines and stipulations to ascertain the project’s eligibility status.

The meticulous PERS review aids lenders in ascertaining whether a condominium project aligns with Fannie Mae’s stringent standards for financing. Key factors evaluated include financial robustness, adherence to legal requirements, efficiency in property management, owner-occupancy ratios, and adequacy of insurance coverage.

Undergoing a thorough PERS review provides lenders with the confidence that a condominium project fulfills Fannie Mae’s eligibility prerequisites, ensuring a smoother financing process.

Insurance Reviews

Performing an insurance review for a condo involves assessing the condo association’s insurance policy to ensure it meets the changing needs of the association. Here are some steps to guide you in conducting an insurance review for a condo:

Review the Condo Association’s Insurance Policy

To ensure you have a comprehensive understanding of the coverage and limits provided, it is highly recommended that you obtain a copy of the condo association’s insurance policy. Take the time to thoroughly read through the policy, paying close attention to the details, exclusions, and any specific terms that may impact your understanding of the insurance coverage. This proactive approach will enable you to make informed decisions and ensure that you are adequately protected in case of any unforeseen events or damages.

Assess Condo Insurance Coverage Adequacy

Evaluate the insurance policy thoroughly to ensure it adequately covers the potential risks and liabilities specific to the condo association. Take into account various factors, including property damage protection, liability coverage for claims, insurance for common areas, and any distinctive aspects or characteristics of the condo community that might require specialized coverage. By conducting a comprehensive assessment and considering these nuanced details, you can better protect the interests of the condo association and its members.

Check for Exclusions and Limitations of the Insurance Policy

Identify any potential exclusions or limitations outlined in the insurance policy that could potentially expose the condo association to uncovered losses. It is crucial to meticulously examine the policy to pinpoint specific events or circumstances that may not fall under the coverage umbrella, ensuring comprehensive protection for the association against unforeseen risks and vulnerabilities.

Evaluate Deductibles of the Insurance Policy

Please take the time to review the deductible amounts that are specified in the condo association’s insurance policy. It is important to thoroughly assess whether these deductibles are not only reasonable but also manageable for the financial well-being of the association.

Conduct a Risk Assessment of the Condo Community

To comprehensively assess the current risks and vulnerabilities of the condo community, it is crucial to delve into various aspects. This includes evaluating the geographical location in terms of susceptibility to natural disasters or security threats, examining the resilience of building materials against potential hazards, scrutinizing the effectiveness of existing security measures in place, and analyzing the historical data of insurance claims to pinpoint recurring issues. By conducting a thorough examination encompassing these factors, we can identify any potential gaps in coverage that require immediate attention and mitigation strategies to fortify the community against unforeseen challenges.

Consult with Insurance Professionals

If the need arises, it’s beneficial to seek guidance from insurance professionals, like experienced insurance agents or knowledgeable brokers, who have a specific focus on condo associations. Their expertise can prove invaluable when it comes to exploring a wide array of coverage options, discussing potential policy enhancements, and identifying opportunities for cost savings within your condo association’s insurance portfolio.

Compare Insurance Quotes

To effectively safeguard the condo association’s interests, it is advisable to obtain quotes from various insurance providers. By comparing coverage options, pricing details, and terms offered by different providers, the condo association can make an informed decision that ensures optimal coverage at a competitive price point. This comprehensive evaluation process not only enhances financial prudence but also guarantees that the association is adequately protected against potential risks and liabilities.

Communicate with the Condo Association Board

Share the comprehensive findings of the insurance review with the condo association board during the upcoming meeting scheduled for next Wednesday. Engage in a detailed discussion regarding any recommended changes or enhancements to the existing insurance policy. By providing a thorough breakdown of the review’s findings, the board members can gain valuable insights and make well-informed decisions to ensure the best coverage for the association.

Remember, conducting an insurance review for a condo should be done periodically to ensure the coverage remains adequate and aligned with the changing needs of the condo association.

FHA Single Unit Reviews

FHA Single Unit Reviews

FHA single-unit reviews for condos refer to the process by which the Federal Housing Administration (FHA) evaluates individual condominium units within a larger project to determine their eligibility for FHA financing. These reviews are part of the FHA’s efforts to ensure that condo units meet specific standards and criteria for financing.

Here are some key points regarding FHA single-unit reviews for condos:

Purpose of the FHA Single-Unit Review

The purpose behind conducting FHA single-unit reviews is to meticulously evaluate the eligibility of individual condominium units for FHA financing. This process ensures that even if the entire condominium project is not FHA-approved, qualified individual units can still secure FHA financing, offering more flexibility and opportunities for potential buyers looking to invest in such properties.

Minimum Condo Occupancy Requirement

FHA regulations stipulate that approved condominium projects must have a minimum of 50% of the units occupied by owners in most cases. This criterion is in place to guarantee a balanced owner-occupancy ratio within the condominium development, promoting a stable and well-maintained community environment that aligns with FHA standards.

Condo Eligibility Criteria

To qualify for FHA financing as a single unit, the condo must adhere to specific standards and criteria established by the FHA. These criteria encompass various factors, including the overall condition of the unit, the financial solidity of the condominium association, and adherence to the detailed guidelines outlined by the FHA to ensure a smooth and compliant process for potential buyers seeking FHA-backed loans.

Spot Approval vs. Single Unit Approval

In the past, the Federal Housing Administration (FHA) utilized a spot approval process that allowed for the individual approval of condo units. This approach offered flexibility but had its limitations. However, a significant shift occurred on October 15, 2019, when the FHA introduced the Single Unit Approval program. This program was designed to streamline the approval process, providing a more efficient and comprehensive method for approving condo units compared to the previous spot approval system.

FHA Single-Unit Approval Process

The FHA single-unit approval process is a comprehensive evaluation conducted by an FHA-approved mortgage lender to determine the condo unit’s eligibility. During this assessment, the lender thoroughly examines various factors, including the unit’s condition, marketability in the real estate sector, and adherence to the stringent FHA guidelines. This meticulous review ensures that the unit meets all necessary criteria for FHA approval, providing assurance to both the lender and the prospective buyer.

It’s important to note that FHA single-unit reviews for condos aim to ensure that individual condo units within a project meet FHA standards and can be financed using FHA-insured loans. These reviews provide confidence to lenders and buyers in the eligibility and marketability of the condo units.

At Condo Approval Professionals, we stand behind every review!  Upon completion of the Condominium Project Review, a signed warranty is issued for the Condominium Project (if the Condominium Project meets associated governmental guidelines.)

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