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Fannie Mae Streamlines Guidelines for Condo Buyers
WASHINGTON, DC -- Fannie Mae plans to update its condominium guidelines to make it faster and easier for mortgage lenders to obtain project approval for homebuyers purchasing condos. The update, slated to take effect in the second quarter of 2005, will help lenders serve more first-time homebuyers seeking affordable financing.
Fannie Mae will update its condo guidelines in response to lenders who said clearer, more concise project approval guidelines would help them originate more condominium loans, often an affordable alternative to single-family detached homes.
The changes announced today will include a more straightforward process for condominium project approval and less restrictive eligibility criteria, including the reduction of some pre-sale requirements and a loosening of investor concentration limitations. Details of the changes will be provided in a Fannie Mae Selling Guide announcement, to be issued in early May. The changes will cover four categories, based on the four processes by which a single-family mortgage loan secured by a condominium unit will be approved for delivery to Fannie Mae:
* Limited Review: the most streamlined way to gain approval to deliver a condo loan will be expanded with broader eligibility criteria -- particularly when a loan is evaluated by Desktop Underwriter®.
* Expedited Review: this new lender-delegated review category will allow more condo projects to benefit from a streamlined process and more flexible eligibility guidelines, including reduced pre-sale requirements. Expedited Review will be supported by a new web-based online lender registration and project management system known as CondoProjectManagerTM.
* Streamlined Fannie Mae (1028) Review: for those projects that are not eligible for Expedited Review, the current Fannie Mae (1028) review process will be simplified, with reduced pre-sale requirements on certain projects and increased allowable investor concentrations.
* FHA Condominium Approvals: Fannie Mae will begin accepting most Federal Housing Administration (FHA) condo project approvals without requiring a separate Fannie Mae project acceptance, saving lenders time, money and eliminating duplication of effort.
"Condominiums are a first step to homeownership for many first-time buyers, and are a more affordable housing option in many high-cost areas. These updated condominium guidelines will ease the process for obtaining Fannie Mae acceptance for condo projects, which should ultimately benefit home buyers seeking financing on condo units," said Tom Lund, acting head of Fannie Mae's single-family business unit.
The revised condominium project standards will help enable more lenders to participate in condo lending, and boost the availability of Fannie Mae accepted condominium projects in smaller markets, according to Lund.
Source: Fannie Mae
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