19-62: Conforming Condo Project Warranty Documentation

11/25/2019

Lenders that sell mortgage loans secured by units in a condo project are expected to have staff that are knowledgeable about and qualified to evaluate the specific risks presented by these properties.

As a reminder, in addition to selecting the appropriate warranty type, lenders must include all documentation that evidences the project meets condo eligibility requirements. See below for a table reflecting the basic documents that are expected to be in the loan file, based on warranty type:

Review Type	Documentation
Limited or Streamline	Loan documentation\* indicating warranty type HOA Questionnaire Blanket/Master Policy with the HOA as the named insured, in addition to interior coverage, if not included in the blanket policy
Full or Established Review	Loan documentation* indicating warranty type HOA Questionnaire Blanket/Master Policy with the HOA as the named insured, in addition to interior coverage, if not included in the blanket policy
PERS Approval	Loan documentation* with warranty type and unexpired verification of Final PERS approval
CPM	Loan documentation* with warranty type and unexpired CPM Certification number HOA Questionnaire Blanket/Master Policy with the HOA as the named insured, in addition to interior coverage, if not included in the blanket policy Liability Policy Fidelity/Crime Policy, for all projects with 21 or more units Budget with adequate reserves
Reciprocal Project Review (Freddie Mac only)	Loan documentation* with warranty type and unexpired CPM Certification number or verification of Final PERS approval Follow the documentation requirements for either PERS or CPM approval above

*Loan documentation includes but is not limited to: uniform underwriting and transmittal summary (1008), lender created warranty form, and other documents that can correctly identify the warranty type used by the lender.

Note: The lender remains responsible for ensuring the condo project warranty is documented as applicable. Selecting the appropriate warranty type on the loan documentation* indicates the lender has reviewed the condo project and the project meets all applicable requirements.

Please contact your Sales Representative with any questions.