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New Fannie Mae Loan Disclosures - What you need to know.
New Fannie Mae Loan Disclosures – What You Need To Know.
As a result of the Surfside, Florida Cordiaminum tower collapse, Fannie Mae has issued new eligibility guidelines for loans insured by Fannie Mae for condominium and co-op apartments. Under this new criteria, borrowers can expect lenders to request detailed disclosures as to the conditions of the building. Our office has begun to receive these requests which focus on whether there is significant deferred maintenance affecting the property, in addition to seeking other disclosures, such as whether the current-approved-budget includes a contribution to reserves of at least 10% of total collections.
In the event the Board or its managing-agent believe there may need to be a disclosure as to significant deferred maintenance, or similarly an active capital project to repair a damaged building condition, we strongly encourage Boards to consult with legal counsel to determine: (i) what, if any, disclosures should be made; and (ii) if disclosures are going to be made, the proper statements to make.
It is important to note that currently the Illinois Condominium Property Act does not require Boards, their management agent, or homeowners to disclose all the information being sought by these new Fannie Mae eligibility questionaries. Therefore, a consultation with the associations legal counsel is strongly recommended to help mitigate any potential issues or liability.
As managing-agents, our goal is to help facilitate the buying and selling of condominium units for the associations’ we manage, as to maintain and enhance their value. To make the transaction process easier, we are encouraging Boards to permit management to provide these disclosure, although in a manner approved by legal counsel. Our goal is to not impede homeowners ability to sell their unit to a buyer who may be utilizing a Fannie Mae insured loan product.