Condominium Guide. Effective as of October 1, 2014 Primary Capital Mortgage

Transcription

1 Condominium Guide Effective as of October 1, 2014 Primary Capital Mortgage

2 Contents 1. Overview Qualification Lender Full review Lender Limited Review FNMA Approved Projects Geographic Restrictions Florida Project Requirements Insurance Requirements Property Insurance Flood Insurance... 7 Primary Capital Mortgage Effective as of October 1,

3 1. Overview PCM applies prudent underwriting to all condominium approval requests per the content set forth in this guide. When not specifically stated herein, or where conflicts exist between this guide and the FNMA Selling Guide, the guidelines in the Selling Guide will prevail. All reviews will be made in compliance with all federal, state, and local laws including, but not limited to, the Fair Housing Act, and the Equal Credit Opportunity Act. Note: see Non-Agency Underwriting Guide for non-warrantable condominium specific additional requirements 2. Qualification Regardless of approval method, the maximum PCM exposure in any one complex is 10% loan amounts are subject to program eligibility parameters Required documentation for Primary Capital Mortgage (PCM) review must be submitted through the Account Executive or Mortgage Loan Originator o Project Reviews will not be processed by the PCM Condo Committee until 100% of the required documentation is submitted Documentation requirements for each level of review are outlined in the following sections LTV s in excess of 80% are subject to full review and approval by a PCM approved Mortgage Insurance company o Loans that do not receive MI approval will be limited to a maximum of 80% LTV LTVs stated within these guides assume fixed rate financing only. ARMs may be subject to reduced LTV limits. Please refer to the LTV matrix in the PCM posted guidelines for other programs. Primary Capital Mortgage Effective as of October 1,

4 2.1 Lender Full review LTV will be based on occupancy as shown in the table below Occupancy LTV/CLTV/HCLTV-FNMA LTV/CLTV/HCLTV-FHLMC Owner Occupied 95% 95% Second Home 90% 85% Investment Property 85% 85% The project must meet the following to be eligible for a full lender review: Project Type Established Project New Project Two- to-four Unit Project Eligibility Criteria At least 90% of the total units in the project have been conveyed to the unit purchasers; The project is 100% complete, including all units and common areas; The project is not subject to additional phasing or annexation, AND Control of the homeowner s association has been turned over to the unit owners. Fewer than 90% of the total units in the project have been conveyed to the unit purchasers; The project is not fully completed, such as proposed construction, new construction, or the proposed or incomplete conversion of an existing building to a condo; The project is newly converted; OR The project is subject to additional phasing or annexation. Additional eligibility requirements apply for two-to-four unit projects: No single entity may own more than one unit within the project; All units, common elements, and facilities within the project, including those that are owned by any master association, must be 100% complete; All but one unit in the project must have been conveyed to owner-occupant principal residence or second home purchasers; AND The units in the project must be owned as fee simple, and the unit owners must be the sole owners of, and have rights to the use of, the project s facilities, common elements, and limited common elements. Required documentation: Primary Capital Mortgage Effective as of October 1,

5 o PCM Condo Questionnaire for project type (as described above) o Condominium Project Articles of Incorporation o Condominium Project Bylaws o Condominium Project HOA Budget o Operating Budget with reserve account o Condominium Project Insurance Declarations (including Flood, if applicable) o Unit Hazard Policy HO-6 coverage Required if the project master policy does not provide for 100% replacement of the unit, including improvements ( Walls-In ) Master or blanket policies that cover multiple unaffiliated projects are ineligible o New projects, as described above will also need the following Appraisal on subject property Attorney Opinion Letter (prepared by an active real estate attorney) confirming the condominiums legal documents meet the requirements of Chapter B of the FNMA Selling Guide. Eligibility to be determined by FNMA Condo Project Manager (CPM) which will be completed by Primary Capital Mortgage Final approval will be issued by the PCM Condo Committee 2.2 Lender Limited Review LTV will be based on occupancy as shown in the table below: Occupancy LTV/CLTV/HCLTV FNMA LTV/CLTV/HCLTV FHLMC Owner Occupied 80% 90% Second Home 75% 75% Investment Property Not Allowed Not Allowed Loans must receive a Limited or Streamlined Review eligibility message through either DU (version 9.0 or 9.1) or LP in the property section of the findings The project must meet the following to be eligible for a Limited Lender Review o Must be an established project as defined by in the table in Section 2.1 of this guide; AND o The project is not an ineligible project as defined by FNMA or FHLMC Required documentation o PCM Condo Questionnaire for Limited Review o Condominium Project Insurance Declarations (including Flood, if applicable) o Unit Hazard Policy HO-6 coverage Required if the project master policy does not provide for 100% replacement of the unit, including Primary Capital Mortgage Effective as of October 1,

6 improvements ( Walls-In ) Master or blanket policies that cover multiple unaffiliated projects are ineligible Final approval will be issued by the PCM Condo Committee 2.3 FNMA Approved Projects Projects that have been approved by Fannie Mae are acceptable with limited documentation o Projects that have a Special Approval Designation (SAD), Project Eligibility Waiver (PEW), or Florida Special Condominium Approval are ineligible LTV will be based on occupancy as shown in the table below Occupancy LTV/CLTV/HCLTV-FNMA LTV/CLTV/HCLTV-FHLMC Owner Occupied 95% 95% Second Home 90% 85% Investment Property 85% 85% Required Documentation o Evidence of unexpired Fannie Mae approval issued through PERS (Project Eligibility Review Service). Approvals may be printed from the Fannie Mae website at Projects with a Conditional Approval are ineligible. The approval must be active as of the date of the note. PCM must be able to reasonable determine that there are no circumstances that would make the project ineligible for acceptance by Fannie Mae. 3. Geographic Restrictions Loans in excess of 80% LTV may be subject to additional Mortgage Insurance requirements. Please refer to individual MI company guidelines for additional overlays 3.1 Florida Project Requirements New Construction projects located in Florida require FNMA PERS approval New or Existing Condo Projects located in Florida are subject to the below LTV restrictions: Occupancy FNMA PERS Approval-FNMA FNMA PERS Approval - FHLMC PCM Approval through CPM- FNMA/FHLMC Owner Occupied 95% 95% 75% Second Home 90% 85% 70% Investment Property 85% 85% Not Allowed Primary Capital Mortgage Effective as of October 1,

7 4. Insurance Requirements Project insurance requirements must meet all requirements of Fannie Mae/Freddie Mac as outlined in their specific Selling Guide. For complete requirements, refer to the following sections of the selling guides: o FNMA Chapters B , B and B o FHLMC Chapter 58.1, 58.2(c), 58.3, 58.4 and Property Insurance The homeowners association must maintain a master or blanket type insurance policy, with premiums being paid as a common expense. The insurance requirements may vary based on the type of homeowners association master or blanket insurance policy as follows: o Single Entity policy: The policy must cover all of the general and limited common elements that are normally included in coverage. These include fixtures, building service equipment, and common personal property and supplies belonging to the homeowners association. The policy also must cover fixtures, equipment, and replacement of improvements and betterments that have been made inside the individual unit being financed. The amount of coverage must be sufficient to restore the condo unit to its condition prior to a loss claim event. If the unit interior improvements are not included under the terms of this policy type, the borrower is required to have an HO-6 policy with coverage, as determined by the insurer, which is sufficient to repair the condo unit to its condition prior to a loss claim event. o All-In (sometimes known as an all-inclusive ) policy: The policy must cover all of the general and limited common elements that are normally included in coverage. These include fixtures, building service equipment, and common personal property and supplies belonging to the homeowners association. The policy also must cover fixtures, equipment, and replacement of improvements and betterments that have been made inside the individual unit being financed. If the unit interior improvements are not included under the terms of this policy type, the borrower is required to have an HO-6 policy with coverage, as determined by the insurer, which is sufficient to repair the condo unit to its condition prior to a loss claim event. o Bare Walls policy: This policy typically provides no coverage for the unit interior, which includes fixtures, equipment, and replacement of interior improvements and betterments. As a result, the borrower must obtain an individual HO-6 policy that provides coverage sufficient to repair the condo unit to its condition prior to a loss claim event, as determined by the insurer. The master or blanket policy must: o Cover 100% of the insurable replacement cost of the project improvements; o Include general liability insurance for the entire project, including common areas and elements, public ways, and any other areas under its supervision; o Provide at least $1 million of coverage for bodily injury and property damage per occurrence; Primary Capital Mortgage Effective as of October 1,

8 o Include Separation of Insured or Severability of Interest language; o NOT have a deductible greater than 5% of the limit maintained for building coverage; o Provide for at least 10 days written notice to the homeowners association before the insurer can cancel or substantially modify the policy; AND o Include Fidelity or employee dishonesty coverage (for projects with greater than 20 units). The policy must name the condominium homeowners association as the insured, and the premiums must be paid as a common expense by the association, AND The coverage must equal no less than the maximum amount of funds in the custody of the condominium owners association or its management firm at any one time. A lower coverage limit is acceptable if the condominium's Project Documents require the homeowners association and any management firm to adhere to certain financial controls. However, in such case, the coverage limit must at least equal the sum of three months of assessments on all units in the Condominium Project. The insurance policy of the condominium owners association must name the insured in substantially the same language indicated below o Association of Owners of the [Name of Condominium Project] Condominium for the use and benefit of the individual owners (designated by name, if required by law or the governing documents) When an association master policy does not provide coverage for fixtures, improvements, alterations and equipment within the individual units, the unit owner must obtain a HO-6 policy ( walls-in ) 4.2 Flood Insurance If a first mortgage is secured by a unit in an attached condo, and any part of the improvements are in a special flood hazard area (SFHA), the homeowners association must maintain a master or blanket policy of flood insurance and provide for premiums to be paid as a common expense The homeowners association must obtain a Residential Condominium Building Association Policy or equivalent private flood insurance coverage for each building that is located in an SFHA. The policy must cover all of the common elements and property (including machinery and equipment that are part of the building), as well as each of the individual units in the building. The master flood insurance policy must be at least equal to the lower of o 80% of the replacement cost, or o The maximum insurance available from NFIP per unit (which is currently $250,000) If the condo project master policy meets the minimum coverage requirements above but does not meet the one- to four-unit coverage requirements (described in Coverage for First Mortgages), a supplemental policy may be maintained by the unit owner for the difference The contents coverage should equal 100% of the insurable value of all contents (including machinery and equipment that are not part of the building), owned in common by association members Primary Capital Mortgage Effective as of October 1,

9 The information listed above is for mortgage professional use only and is not intended for consumer use. This is not a quotation or guarantee of credit from Primary Capital Mortgage, LLC. This information is provided solely for information purposes, and is subject to change without notice. Individual qualifications and verification of the information should be obtained from a Primary Capital Mortgage, LLC Representative. Primary Capital Mortgage, LLC, NMLS ID #3076. AL (Consumer Credit License #MC-20918); AR (Mortgage Banker-Broker-Servicer License #11299); CO (Supervised Lender s License #989415); CO (Mortgage Company Registration); CT (Mortgage Lender/Broker License #ML-3076); DE (Mortgage Lender License #18413); DC (DC Dual Authority License #MLB3076); FL (Mortgage Lender License #MLD509); GA (Georgia Residential Mortgage Licensee #14887); ID (Mortgage Broker/Lender License #MB-8359); IL (Illinois Residential Mortgage Licensee #MB ); IL (Illinois Residential Mortgage Other Trade Name License #MB ); KY (Mortgage Loan Company License #MC18161); LA (Residential Mortgage Lending License #3076); ME (Supervised Lender License #3076); MD (Mortgage Lenders License #12001); MI (First Mortgage Lender/Servicer License #FR ); MS (#3076, Licensed by the Mississippi Department of Banking and Consumer Finance); MT (Mortgage Lender License #3076 and Mortgage Servicer License #3076); NE (Mortgage Banker License); NJ (Residential Mortgage Lender License); NM (Mortgage Loan Company License); NC (Mortgage Lender License #L ); OH (Mortgage Broker Act Mortgage Banker Exemption #MBMB ); OR (Mortgage Lending License #ML-5294); PA (Mortgage Lender License #48548); SC-BFI (Mortgage Lender/Servicer License #MLS-3076 and Other Trade Name License #MLS-3076 OTN#1); TN (Mortgage License #109434); TX-SML (Mortgage Banker Registration #3076); UT (Residential First Mortgage Notification); VA (Lender License #MC-3013, Licensed by the Virginia State Corporation Commission); VT (Lender License #6703 and Other Trade Name License #6704); WA (WA Consumer Loan Company License #CL-3076); WV (Mortgage Lender License #ML-33806); WI (Mortgage Banker License #3076BA); and WY (Mortgage Lender/Broker License #2625). Full licensing details can be viewed HERE. Primary Capital Mortgage Effective as of October 1,