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Fannie Mae and Freddie Mac Financing

Like the FHA, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have specific requirements when providing financing for condominium sales or refinancing. Fannie Mae involves the FHA, because it was established for the purpose of purchasing FHA loans from loan originators to provide liquidity for government-insured loans. Freddie Mac is a federally charted corporation established to purchase mortgages in the secondary market with the intent to stabilize the nation’s residential markets and expand home ownership.  Each have restrictive policies as to condominium projects that qualify for financing that must be considered in conjunction with the applicable FHA requirements.

 Fannie Mae’s condominium requirements are:

       At least 90% of the total units in the project must be conveyed to unit purchasers.

      Control of the Association must have been turned over to the unit owners.

      The following projects are ineligible for Fannie Mae loans:

           (1) Projects that offer rentals on a daily basis.

           (2) Projects with individual units operated as a hotel or motel.

           (3) Projects with mandatory rental pooling agreements.

           (4) Projects where more than 20% of the total space is used for non-residential purposes.

 Freddie Mac’s condominium requirements are:

      At least 90% of the total units in the project must be conveyed to unit purchasers.

      Control of the Association must have been turned over to the unit owners.

      No more than 20% of the income of the Association can be from sources other than dues and assessments.

 The following projects are ineligible for Freddid Mac financing:

           (1) Timeshares.

           (2) Hotel projects.

           (3) Projects with more than 20% of the total square footage being used for non residential purposes.

           (4) Projects in litigation, arbitration and mediation that arises out of a dispute as to safety, structural soundness or habitability.

           (5) Any condominium that Fannie Mae has rejected.