Project Review: CPM Unavailable Project List and HOA Certification Policy Update – Conforming Loans
Newrez LLC "Newrez" Approved Correspondent Clients: In response to the recent collapse of the condo project in Florida, Fannie Mae and Freddie Mac have established temporary guidance for residential buildings with aging infrastructure and significant deferred maintenance. These updated requirements are effective immediately and apply to all loans secured by units in projects with five or more attached units, regardless of the type of project review or review waiver.
Newrez has updated its Conventional Condo Questionnaire forms to address areas of concerns as detailed in LL-2021-14 and bulletin 2021-38 and now includes questions regarding significant deferred maintenance and unsafe conditions as well as questions regarding special assessments. Use of the Newrez questionnaire is recommended but not mandatory. A Correspondent can use other questionnaire forms provided it contains all the necessary information. For additional information and links to the Newrez forms, refer to the sections in this announcement under Conventional Questionnaire Updates and HOA Cert Policy.
Other important condominium updates per LL2021-14 and Bulletin 2021-38 include the following:
Condo Project Manager (CPM) Unavailable Status: Regardless of the project review process used in underwriting, loans secured by units in any project with a CPM status of “unavailable” are ineligible.
Reserve Requirements: Fannie Mae is suspending flexibility that allowed a lender to obtain a reserve study in lieu of the condo project meeting the 10% budget reserve requirement. Freddie Mac will continue to consider a reserves study when the budget provides less than 10% replacement reserves.
Project Eligibility Waivers (PEW): PEWs will not be issued for significant deferred maintenance, failure to obtain a certificate of occupancy, failure to complete or pass a regulatory inspection, projects subject to large assessments or project insurance policy deficiencies.
Conventional Questionnaire Updates
- Condo Questionnaire – Standard:
These forms have been revised to include questions to address the areas of additional concern regarding building safety, structural integrity, soundness, and habitability.
- Condo Questionnaire – Recert
This form may be used in lieu of a Standard Condo Questionnaire if Newrez has an expired Standard Condo Questionnaire for the project, regardless of age. The project must have met established guidelines on the previous questionnaire. Refer to the Correspondent Portal, Client Library, Project Review “Project Approval Log, Condos” for a list of approved condos and their HOA Questionnaire Cert expiration date.
- Conventional Condo Questionnaire – LCOR ≤ 80% LTV/RefiNow/RefiPossible
On these transaction types, this form is not required if:
- The subject loan has an appraisal; or
- The Project Review Department has a valid (unexpired) HOA Questionnaire. Refer to the Correspondent Portal >Client Library > Project Review “Project Approval Log – Condos” for a list of approved condos and their HOA Questionnaire Cert expiration date.
HOA Cert Policy for Conventional Loans
- Use of the Newrez Project Questionnaire is not mandatory
- The HOA may utilize services from HomeWisedocs.com, Condocerts.com, First Service Residential, or like companies in lieu of the Newrez Project Questionnaire; however, the Project Analyst may condition for additional information if it could impact the eligibility of the project.
- Questionnaires completed by another bank, mortgage company, lender, broker, escrow company, etc. are generally accepted, but the Project Analyst may request additional information.
- Expiration – Questionnaires are valid for 12 months for established projects and six (6) months for new projects. If the Project Questionnaire expires, either a Condo Questionnaire Recert or a new Standard Condo Questionnaire must be obtained.
- HOA Questionnaire Waiver for LCOR ≤ 80% LTV/Limited/Streamline Reviews/ RefiNow/RefiPossible
If the Project Information section of the appraisal is completed and evidence that the HOA is not subject to ineligible litigation is provided, a Condo Questionnaire may be waived. The Condo Questionnaire may not be waived if a loan has an appraisal waiver.