Understanding Fannie Mae and Freddie Mac Forms for Condo Associations

 Posted on June 12, 2023 in Condominium & Homeowner Association Law

Fannie Mae and Freddie Mac play an important role in the real estate market. These government-sponsored enterprises (GSEs) purchase mortgages from lenders and help maintain stability in the mortgage markets. To ensure that a loan can eventually be purchased by Fannie Mae or Freddie Mac, lenders will need to make sure mortgages conform to certain requirements. In situations where potential buyers are considering purchasing a condominium, a condo association will be required to provide certain types of information to ensure that it meets the requirements of Fannie Mae and/or Freddie Mac. By understanding the types of forms that will need to be filled out, condominium associations can make sure they are taking the correct steps to protect the interests of their members.

Appraisal Forms and Condominium Project Questionnaires

In many cases, mortgage transactions will require appraisals. This will ensure that the full value of the property being purchased is understood. In most cases, an interior and exterior appraisal will be required, and either Fannie Mae Form 1073 or Freddie Mac Form 465 will need to be filled out to prove a report of the appraisal of an individual condominium unit. If an exterior-only appraisal will be sufficient, Fannie Mae Form 1075 or Freddie Mac Form 466 may be filled out. For appraisals of detached condominium units, Fannie Mae Form 1004 may be used. Freddie Mac Form 70 may be used for interior and exterior appraisals of detached units, or Form 2055 may be used for exterior-only appraisals. For manufactured homes located in condominium projects, Fannie Mae Form 1004C may be used. Freddie Mac Form 70B may also be used for manufactured homes, and Form 465 will also need to be attached as an addendum.

A Condominium Project Questionnaire (Fannie Mae Form 1076 or Freddie Mac Form 476), will also be required. This form provides detailed information about the condominium project, including its level of completion, the number and types of units, insurance information, financial controls, and more. In a recent addition to this questionnaire, Fannie Mae and Freddie Mac have required information about whether there has been any significant deferred maintenance or potentially unsafe conditions. Any special assessments will also be reviewed, and at least 10 percent of a condominium association's assessment income must be dedicated to reserves.

Filling out the Fannie Mae and Freddie Mac forms correctly is crucial for condominium associations. Failure to submit forms when required may affect the sale process, or it could even cause a condominium to be "blacklisted" by Fannie Mae and Freddie Mac and become ineligible for certain types of mortgages. However, condo associations will also need to understand when it may not be advisable to submit a Condominium Project Questionnaire or other forms in order to protect the interests of their current members.

Contact Our Cook County Condo Association Attorneys

The guidance of a skilled legal professional can be essential for condominium associations that need to address concerns related to Fannie Mae and Freddie Mac. At Dickler, Kahn, Slowikowski & Zavell, Ltd., our Chicago condominium association lawyers can help determine what types of forms will need to be submitted in response to inquiries from potential buyers, and we can work with an association to compile the necessary documents and fill out forms correctly. We can also ensure that condominium associations have the proper policies and procedures in place to protect the interests of their members. To learn more about the services we can provide for condo associations, contact our office at 847-593-5595.

Sources:

https://singlefamily.fanniemae.com/selling-servicing-guide-forms

https://guide.freddiemac.com/app/guide/section/5604.1

https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B4-Underwriting-Property/Chapter-B4-1-Property-Assessment-and-Valuation/Section-B4-1-2-Documentation-Standards/1032991831/B4-1-2-01-Appraisal-Report-Forms-and-Exhibits-03-01-2023.htm