Fannie Mae & Freddie Mac

CAI is working to ensure that residents of community associations have access to fair and affordable mortgages through our engagement with federal agencies on reform of Government Sponsored Enterprises (GSEs).  Government sponsored entities such as Fannie Mae and Freddie Mac have been important actors in ensuring the flow of capital into the mortgage finance system, ensuring the availability of affordable financing for homebuyers for over a generation.

The Uniform Condominium Questionnaire is intended to reduce the burden on community associations that routinely provide condominium project information to mortgage lenders.

The first option, Form 1076, provides a broad overview of a condominium association's financial, legal, and property status. Once a condominium association has completed a Form 1076 for a lender, it is anticipated the lender will not resubmit Form 1076 for subsequent inquiries.

A second, shorter form, Form 1077, is intended for use by lenders where a condominium association has previously completed a Form 1076. Freddie Mac and Fannie Mae have requested that lenders update Form 1076 on only a periodic basis.

Lending Requirements, Key Points

A project will likely be deemed ineligible if:

1. The project needs critical repairs.
2. There is a current evacuation order due to unsafe conditions.
3. There are unfunded repairs totaling more than $10,000 per unit.
4. The property insurance coverage is not full replacement value and doesn’t include all the coverage as required. (Note: cash value replacement is unacceptable)

Association’s budget must include the following:

Fannie Mae

1. Adequate funding for insurance deductibles
2. At least 10% of the budget must be for reserves.
3. No more than 15% of income comes from rental or leasing of commercial parking facilities. 

Freddie Mac

1. Adequate funding for insurance deductibles
2. Less than 10% to be set aside for reserves provided that the association has a reserve study that supports the lesser amount, and the association is following the reserve study.
3. No more than 15% of owners are more than 60 days delinquent in paying their assessments.
4. Commercial space may not be more than 35% of the total above and below grade square footage is used as commercial or non-residential space, the project is ineligible.

For a further summary of lending requirements, please visit the CAI Advocacy Blog.