Freddie Mac Streamlines Origination Process for Condo Units
Written By: Joel Palmer, Op-Ed Writer
Freddie Mac has announced a change to its Condo Project Advisor program to help streamline mortgage originations involving condominium loans.
Freddie said with this enhancement, mortgage underwriters and processors can determine “in just minutes” whether a loan to finance the purchase of a condo unit meets the GSE’s guidelines.
Condo properties can now be designated as “Project Certified” status for Project Assessment Requests (PAR). This designation confirms that condo properties meet certain project review and general eligibility requirements for financing.
If a property receives this designation, lenders only need to do minimal project underwriting, which may save lenders time and borrowers money, Freddie said in its announcements. Additionally, lenders can also now submit to have a condominium receive Project Certified status for certain projects at no cost for loans secured by units in condo projects that don’t already carry this status.
“Condominiums provide a key path to homeownership, particularly for first-time and low-income homebuyers. Considering the challenges facing the housing market currently, it should come as no surprise that condo financing is especially critical,” said Tanya DeLia, Single-Family Vice President of Collateral Risk Management at Freddie Mac. “We are committed to continuing to find ways to help streamline condo loan originations, while helping lenders ensure that condo homebuyers are put on a path of sustainable and successful homeownership in condo communities.”
Condo Project Advisor allows Freddie Mac authorized sellers, through Project Waiver Requests (PWRs), to request unit-level exceptions for established condominium projects early in the origination process. Unit-level waivers are for otherwise ineligible condo projects that require special review or examination for one or more eligibility criteria.
With the new designation, lenders can submit PARs in 3 steps: 1. type in a zip code; 2. select the project name and street; and hit enter. Freddie said that within seconds, users receive details on whether the project meets the requirements assessed by Condo Project Advisor or if there are potential issues that may make a project ineligible, such as having condominium hotel characteristics, excessive commercial space or single investor concentration.
When issues are identified, feedback messages let lenders know where to focus their review early in the origination process.
Freddie said there will be an appeal process if a property is assigned a “Not Eligible” status. In addition to providing clarity around issues impacting condo loan delivery, this enhancement may reduce condo-related repurchase requests for lenders.
The appeal process for a Not Eligible status determination will be effective for condo loans beginning February 26, 2024.
Freddie Mac’s announcement was welcomed by several industry stakeholders.
“Our association has advocated for these changes and previously called for government-sponsored enterprises to take a proactive role in helping to improve the availability and consistency of association documentation, financials, and studies,” said the National Association of Realtors. “Approved statuses eliminate the need for costly and time-consuming resubmissions, while unapproved statuses require submission.”
“Today’s action by Freddie Mae tracks recommendations made in a joint letter by CHLA, the National Association of Realtors, and the Community Associations Institute in June which requested that the GSEs should be required to make public their lists of condo projects ineligible for loan purchase, along with guidance as to the actions necessary to make them eligible,” said the Community Home Lenders of America.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
