IT MAY BECOME IMPOSSIBLE TO GET A NEW MORTGAGE IN MANY CONDOS

By Eric Glazer, Esq.

Published January 24, 2022

 

As if condos didnít have enough problems, Fannie Mae and Freddie Mac have just come out with new guidelines that condos must follow.  Fannie Mae and Freddie Mac are government-sponsored agencies that purchase large quantities of home loans to keep money circulating throughout the home mortgage economy.   They wonít purchase these loans any longer unless:

 

Delinquent assessments for Established Condominium Projects

 

No more than 15% of the total number of units in a project are 60 or more days delinquent in the payment of their HOA assessments.

 

The Condo Must Have a Reserve Study

 

The reserve study must comply with the following requirements:

 

1.     The reserve study generally must include:

  • An inventory of major components of the project

  • Financial analysis and evaluation of current reserve fund adequacy, and

  • Proposed annual reserve funding plan

2.     A reserve studyís financial analysis must validate that the project has appropriately allocated the recommended reserve funds to provide the Condominium Project with sufficient financial protection comparable to Freddie Macís standard budget requirements for replacement reserves

3.     The reserve studyís annual reserve funding plan, which details total costs identified for replacement components, must meet or exceed the studyís recommendation and conclusion

4.     The most current reserve study (or update) must be dated within 36 months of the Sellerís determination that a Condominium Project is eligible

5.     The reserve study must be prepared by an independent expert skilled in performing such studies (such as a reserve study professional, a construction engineer, a certified public accountant who specializes in reserve studies or any professional with demonstrated experience and knowledge in completing reserve studies)

6.     The reserve study must meet or exceed requirements set forth in any applicable state statutes

7.     The reserve study must comment favorably on the projectís age, estimated remaining life, structural integrity and the replacement of major components

  

If the Seller relies on a reserve study that meets the requirements of this section, the project's budget must contain appropriate allocations to support the costs identified in the study.


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About HOA & Condo Blog

Eric Glazer

Eric Glazer graduated from the University of Miami School of Law in 1992 after receiving a B.A. from NYU. He has practiced community association law for three decades and is the owner of Glazer and Sachs, P.A. a five attorney law firm with offices in Fort Lauderdale and Orlando.

Eric is Board Certified by The Florida Bar in Condominium and Planned Development Law.

 

Since 2009, Eric has been the host of Condo Craze and HOAs, a weekly one hour radio show that airs at 11:00 a.m. each Sunday on 850 WFTL.

   

See: www.condocrazeandhoas.com.

   

Eric is the first attorney in the State of Florida that designed a course that certifies condominium and HOA residents as eligible to serve on a Board of Directors and has now certified more than 20,000 Floridians all across the state. He is certified as a Circuit Court Mediator by The Florida Supreme Court and has mediated dozens of disputes between associations and unit owners. Eric also devotes significant time to advancing legislation in the best interest of Florida community association members.



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