On December 16, Fannie Mae sent lenders the following bulletin:
Fannie Mae requires that established condominium projects consisting of attached units have an owner-occupancy ratio of at least 51 percent at the time the loan is originated (purchase or refinance) if the mortgage loan being delivered is secured by an investment property. Established projects where borrowers will occupy the unit or use the unit as a second home are not subject to any owner-occupancy ratios.
Due to current market conditions, many condominium projects are experiencing higher numbers of financial institution- owned REO units, which many lenders may be counting as non-owner-occupied under Fannie Mae’s current requirements.
Fannie Mae is clarifying its condominium project owner-occupancy ratio policy to include REO units that are for sale (not rented) as owner-occupied units in the owneroccupancy ratio.
When an investor applies to Fannie for loan, Fannie requires that at least 51% of the units in the complex are owner occupied. In the past, any vacant unit that had been foreclosed on and was bank-owned was considered non-owner occupied. Under this new policy, Fannie says it will now count bank-owned REO units that are listed for sale, but are not rented, as if they are owner-occupied when computing the 51 percent ratio.
This will help investors qualify for Fannie Mae loans and, hopefully, help stimulate sales of units that have been languishing on the market.
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