Fannie Mae recently changed their condominium lending guidelines. These changes were meant to simplify policies and increase underwriting flexibility.
Here is a list of some of the most beneficial changes:
- Waive the single-entity ownership percentage requirement when the purchase transaction will result in a reduction in the single-entity ownership concentration
- Not include units held by non-profits, affordable housing programs, or institutions of higher education in the percentage of single entity ownership calculation
- Allow single-entity ownership in projects with 21 or more units to increase to 20%, up from 10%
- Increase allowable commercial space to 35% of the projects total square footage, up from 25%
- Exempt commercially owned or operated parking spaces from the project’s commercial space calculations
- Allow a new condo project to be reviewed as an “established” project if requirements are met
- Condo properties approved by FHA’s HUD Review and Approval Process (HRAP) will only require a limited review
- Waive project review requirements on smaller properties (two to four unit condo projects)
These updated guidelines better reflect current trends in condo development and provide additional flexibility for condominium lending reviews. The loosened requirements permit many condominium buildings which previously did not meet lending review criteria to qualify for conventional financing, creating additional inventory for home shoppers and a simplified financing process.
Specifically in Seattle, the commercial space percentage limits and calculation changes will be helpful for condo communities such as 2200 Westlake, Enso and Tribeca.
By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.