Fannie Mae Approved Condos in Ft. Lauderdale and South Florida
The Federal National Mortgage Association (FNMA) is known as Fannie Mae and is an enterprise that purchases and secures Mortgages.
If you’re searching for Condos and Townhouses, you might have noticed comments in some Listings indicating that the Community where the Listing is located IS or ISN’T Fannie Mae approved. Buyers have asked me what “Fannie Mae Approved” means and I included details below.
In 2009, Fannie Mae established a set of Guidelines that Condos must meet in order to Buyers to finance purchases within various Buildings (the vast majority of Conventional Loans are backed by Fannie Mae). These Guidelines include the following:
- No more than 10% of the Units can be owned by a single Entity (example: a Developer or other person who owns more than 10% of the total Units in the Building)
- At least 10% of the Budget must be allotted for Reserves and replacement (the Building must have sufficient Reserves!)
- If a new Condo or newly converted Condo building, at least 70% of the Units must be sold or under contract for purchase
- No more than 15% of the Owners may be more than 30 days past due in payment of their Association payments
- No more than 20% of the Building can be used for non-Residential space
- Owners in the Building must Insure the interior of their Units
- The Building must have Fidelity Insurance
What these requirements mean to you is that, in most cases, if a Building does not meet all of the requirements, Cash purchases are the only ones allowed in the Building (as is the case with some Buildings).
An alternative to Cash purchases in Buildings that do not meet the requirements is financing obtained from a private Lender/a non-Fannie Mae secured Loan. a few Buildings which do not meet the Fannie Mae requirements have arranged Financing with private Lending sources, which is a significant benefit to Buyers who are interested in financing their purchase.
So, how do you find out if a Building is Fannie Mae approved?
When you place an Offer, your Lender will require that the Condo’s Managment Office completes a Questionnaire that verifies whether Fannie Mae criteria have been met. Typically, there is a processing fee that’s required to be paid to the Management Office for completion of the Questionnaire and this process is completed after a Property Owner accepts a Buyers offer to purchase a Unit, HOWEVER, proceeding with the property purchase is contingent upon satisfactory responses on the Questionnaire, so you are able to cancel the property purchase without penalty if it’s determined that you’re unable to Finance your purchase.
Aside from completion of the Questionnaire, I’m able to search Property Tax Records to determine if more than 10% of the Units are owned by a single Entity, so in such cases we will at least have that piece of information prior to completion of the Questionnaire and, just knowing that bit of information alone, could disqualify the Building from Fannie Mae approval in cases of established Buildings that are not new or newly converted.
Some Condos have applied to Fannie Mae for approval and were approved during the Application and approval process. Those Buildings are listed on the list of approved Condos on Fannie Mae’s website, however, that list in no way represents a complete list of Buildings that meet Fannie Mae’s approval since many Buildings do meet the requirements, but just haven’t completed the Application and Approval process (the fee for review and approval of new Buildings can cost a maximum of $15,000, so some Buildings choose not to complete the process).
There are Buildings I’m aware of that currently do not meet criteria for Financing, however, some Buildings that didn’t previously qualify now qualify for Financing and vice versa, so the only definite way to determine if a purchase in the Building can be Financed is by having the Condo Questionnaire completed and submitted to your Lender for review.
NOTE: Fannie Mae approval SHOULD NOT be confused with FHA Approval. Read my post here about FHA Approved Buildings.
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