General requirements applicable to all condo loans:

• HOA in control for 12 months. (Unless already approved)

• 90% of the units in the condo project sold.

• No single entity owns more than (20% for FNMA, 25% for FHLMC) of the total units in the project.

• No more than 20% of the total square footage of the project can be for non-residential purposes.

• No more than 15% of the unit owners are more than 60 days delinquent in payment of homeowner’s dues.

• At least 10% of the budget provides for the funding of replacement reserves and deferred maintenance.

• $1,000,000 business liability coverage.

• Fidelity coverage for projects over 20 units. Must cover the maximum funds that are in the custody of the HOA or its management agent at any time while the policy is in force. Coverage must equal at least the sum of three months of assessments on all units in the project.

• Projects possessing elements of hotel type services or advertising are ineligible.

• Appraisal should contain two recent comparables inside the subject project as well as one or more in a similar project outside the subject project.

• If documentation is submitted for a full review and the project is not approved, the loan cannot be countered for a limited review approval

• PERS Approval – Do not need 90% conveyed. Must meet information listed under type T on the condo submission instructions. (Sellers Guide, Conventional UW Guidelines)

• HO6 Insurance: The HO-6 insurance policy must provide coverage in an amount that is no less than 20% of the condominium unit’s appraised value. The HO-6 policy must include wind and hurricane coverage if the property is located in a hurricane prone area. The master policy must include replacement of improvements and betterment coverage to cover any improvements that may have made to the unit.

• Master Hazard: Coverage must equal 100% of the insurable replacement cost of the project improvements, and the deductible cannot exceed 5% of the policy face amount.

• Flood Insurance: Coverage must be equal to the lesser of: 1) $250,000 per unit, or 2) 80% of the replacement cost as determined by the insurance provider

There are two types of lender reviews and approvals for condos.