Effective January 1, 2022, the Federal National Mortgage Association (FNMA, otherwise known as Fannie Mae) established new regulations that now require certain types of community associations to provide extensive information associated with the condition of its building/s in order to obtain a loan insured by FNMA.
These regulations will specifically impact an association when an owner sells or seeks to refinance their unit. Upon sale or refinance, the association may need to provide a Seller Disclosure document providing additional information regarding the association’s:
- long-term financial condition
- structural integrity
- deferred maintenance information
- building code issues
Projects with unsafe conditions and/or significant deferred maintenance may be considered ineligible. Additionally, special assessments will be reviewed more stringently.
Documentation of any pertinent paperwork must be carefully maintained should an appraiser or lender submit a request.
New Reserves Requirement
Among the new Fannie Mae requirements, it’s important to highlight that at least 10% of the association’s budget is allocated towards reserves.
Non-compliance with this requirement may jeopardize the owner’s sale or ability to refinance their unit.
This is a new and critical requirement that board members can quickly address. Our law firm can assist in the process. If your budget does not satisfy this reserve funding requirement, contact your attorney at KSN, call 847-537-0500, or visit www.ksnlaw.com.
Legal Resource
To assist with the compliance of these new Fannie Mae regulations, KSN has created a Fannie Mae supplemental disclosure packet (FSDP) containing responses to the new portion of the Fannie Mae Form 1076 (pages 6-8 exclusively) for your association.
This service will significantly relieve your board and property management from the burden of completing new Fannie Mae requests regarding building safety, soundness, structural integrity, and habitability.
For those KSN clients on the Enhanced or Premium Retainer, the Lender Disclosure work is included. If your association is not on retainer with KSN, please reach out to your attorney for a proposal, call 847-537-0500, or visit www.ksnlaw.com/contact.
KSN Retainer Plans
KSN offers retainer plans that allow condominium, homeowner (HOA), and townhome community associations to stretch and manage their budgets.
Below are some of the substantial benefits included in our retainer programs:
- Communication regarding foreclosures and closings with realtors, lenders, attorneys, process servers, insurance companies, and title companies
- Review and analysis of your association’s governing documents, including Declaration, and Rules and Regulations
- Review and revision of contracts, loans, and other legal documents
For more information about KSN’s retainer programs, please visit www.ksnlaw.com/retainer-program.
Please note the material contained in this article is for educational and informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained in this article. You should not act on the information discussed in this article without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information in this article, the law can change quickly. Accordingly, please understand that information discussed in this article may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed in the article law at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the article, or the accessibility of the article generally. This article may be considered advertising in some jurisdictions under applicable law/s and/or ethical rules/regulations. © 2022 Kovitz Shifrin Nesbit, A Professional Corporation.