Florida Non Warrantable Condominium Mortgage Lenders

A condominium project is one in which individual owners hold title to units in the project along with an
undivided interest in the real estate that is designated as the common area for the project. The units in the
project must be owned in fee simple and the unit owners must have the sole ownership interest in and rights
to the use of, the project’s facilities, common elements, and limited common elements.
A condotel project is located in a resort area with a rental management company that provides occupancy
on an interim basis (daily, weekly, etcetera). Condotel projects are typically not eligible for financing.
To qualify as an acceptable condominium unit, the condominium project must be common for the area and
demonstrate good marketability.
Florida Non Unwarrantable Condo Lenders Mortgage Corp. will not lend on more than 20% of the units in a condominium project.

Florida Non-warrantable Condominiums

All non-warrantable projects require a full review. The below documentation is required:
• Full Appraisal
• HOA Questionnaire
• Project Budget
• Documented insurance coverage

The following restrictions will apply to non-warrantable condo projects:
• Florida Non Unwarrantable Condo Lenders will lend on a maximum of 1 unit in the project
• A single entity may not own more than 20% of the total units
• No more than 40% of the project can be used for commercial space
• No pending litigation for structural defects
• The subject unit may not be a studio or efficiency unit

• 80% LTV maximum

Florida Condominium Eligibility Requirements

The maximum number of total units in the project owned by the same entity or individual may not
exceed 30%.
• All common areas and facilities must be complete.
• Non-warrantable condominium projects will be reviewed on a case by case basis only, subject to the
criteria listed below. A pricing add may apply.

Florida Condominium – Established Projects

• 90% of the total units in the project must be sold and conveyed to the unit owners.
• 50% of the total units in the project must be owner occupied.
• All phases are complete.
• HOA must be conveyed to the unit owners – no developer or builder-controlled projects allowed.
• All comparable sales may be from within the subject’s project if the project is established and
consists of 100 or more units. Recent sales of model match units, if available, must be utilized in the
appraisal report.

Florida Condominium – Newer Projects

• 60% of the total units in the project or subject’s phase must be sold and conveyed to the unit owners
AND at least 60% of the units must be owner occupied.
• Project may be subject to additional phasing.

• HOA should be in control – project under Developer or Builder control will be considered on a case-
by-case basis only.

• Comparable sales must include at a minimum:
o One (1) from inside the project; and
o Two (2) from outside the project.
• Budget Analysis (Addendum B) and a Project Analysis (Addendum A) are required.

Florida  Condominium – Smaller Projects (less than 20 units)

• 100% of the total units in the project must be sold and conveyed to the unit owners.
• 50% of the total units in the project must be owner occupied.
• All phases are complete.
• HOA is conveyed to the unit owners – project may not be under developer or builder control.
• Smaller projects that are common for the area are acceptable with like comps from the subject’s
market area.
• Smaller projects with no HOA will be considered case-by-case basis.
• Projects consisting of three (3) units or less require proof of an arbitration agreement in the Articles
and By-laws.
• Comparable sales must include at a minimum:
– One (1) from inside the project; and
– Two (2) from outside the project.

Florida Condominium Conversion Mortgage Lenders

• 100% of the total units in the project must be sold and conveyed to the unit owners.
• 50% of the total units in the project must be owner occupied.
• All phases must be complete.
• HOA must be conveyed to the unit owners – no developer or builder-controlled projects allowed.
• Converted condominium projects must be common for the area and demonstrate market acceptance
as evidenced by comparable sales of other apartment conversions in the area.

Florida Condominium – High Rise Condominium Projects (Five (5) stories
or greater)

High-rise condominium projects are considered on a case-by-case basis. They must be common for the area
as evidence by comparable sales. Comparable sales must be from other high-rise condominium projects in
close proximity to the subject and the sales must be similar in design, appeal, market area, etcetera.
• The project may have commercial uses on the first floor only, when typical for the area.
• Elevator access to each floor is required.
• Studio units are not eligible.
• Comparable sales must include at a minimum:
o One (1) from inside the project tower; and
o One (1) from outside the project tower.

Florida Condominium – Documentation Requirements

1. HOA Information Letter – verifying the following:
• Condominium project is not currently involved in any litigation. Generally, a condominium
project that is currently in litigation is not eligible for financing: however, Florida Non Unwarrantable Condo Lenders
Mortgage Corp. will consider each case on an individual basis.
• Total number of units in the project
• Total number of phases that are not complete
• Percent of the units sold and conveyed to the unit owners
• Percent of the units owner occupied
2. Percent of units owned by any one entity or individual and If and when the project was conveyed to
the unit owners (i.e., HOA in control).
3. Hazard insurance
4. in the name of the HOA showing 100% guaranteed replacement coverage.
5. General liability in the name of the HOA for a minimum amount of coverage equal to one million
dollars ($1,000,000) per occurrence.
6. Flood insurance & boiler insurance in the name of the HOA (if applicable).
7. Monthly HOA fee for subject.

Condo Ground Lease Properties

A ground lease is a condition; whereby the persons listed on the title owns the dwelling, but leases the land
on which the dwelling exists. The appraisal report must include comparable sales that are leasehold
properties, unless the leasehold fee interest is being purchased through the subject transaction. The terms
of the leasehold must be referenced in the appraisal report. All Leaseholds are subject to approval by
Florida Non Unwarrantable Condo Lenders Mortgage Corp. ’s legal counsel. All requests for approval must include the following items:
• Copy of the recorded ground lease agreement,
• Copy of all sub-lease agreements, and
• Copy of the appraisal report.
Ground lease agreements must meet the following:
1. The lease and any sub-lease must be recorded in the appropriate public land records.
2. The use of leasehold or ground rents must be an accepted practice in the area and properties with
them must be readily marketable.
3. The original term of the lease does not terminate earlier than five (5) years after the maturity date of
the mortgage.
4. The mortgage must cover the improvements and the mortgagor’s leasehold interest in the land.
5. An ALTA Leasehold Loan Policy must insure the leasehold estate and the improvements.
6. The lease does not contain provisions for termination in the event of damage to or destruction of the
premises as long as the leasehold exists.
7. For sub-leasehold mortgages, the sublease payments are at least equal to the amount of the lease
payments. The sublease payments are not due less frequently than the lease payments.
8. A ground lease must give the leasehold mortgagee standard protections necessary to protect the
security of a leasehold mortgagee including the right to receive notice, at least 30-days, of the
lessee’s default under the ground lease. The mortgagee must have the right, with adequate time, to
cure such default, and in the case of incurable defaults of the lessee, the right to enter into a new
ground lease with the lessor on terms financially identical and otherwise substantially identical to the
existing ground lease.

NON- WARRANTABLE CONDO LENDERS FLORIDA

FLORIDA NON-WARRANTABLE CONDO MORTGAGE QUESTIONNAIRE ANSWER KEY

1 Project is: Condo and PUD’s are allowed. HOA certification not needed for a PUD
2 Unit is: Attached and Detached projects are allowed
3 Units are:If Leasehold, project is ineligible
4 Unit owners in control of HOA?Developers or unit owners may be in control. If Developer is still in control, condo is considered new and requires a FNMA PERS approval
5a Are all units complete? Are all common elements and amenities with the subject phase complete?
All units, common areas, and recreational facilities must be 100% complete for the subject phase
6a Is the project a legally phased project? If yes, is the project subject to additional phasing / annexation / add-ons?
Additional phasing and add-ons are allowed. Condo is considered new and requires PERS approval
7a Is the project a conversion of an existing building? If yes, was conversion a full gut-rehabilitation?
Condo conversions that are at least 3 years old are eligible
8 Project pre-sale and owner occupancy questions are for residential units only: The date when first units were made available is used to determine if the project is selling at an acceptable rate
9a How many units are over 30 days delinquent? If units are delinquent, what is the balance owed?
If more than 15% of the total units or 10% of the total budget are greater than 29 days delinquent, project is ineligible.
10a Total income budgeted this year, total reserves budgeted:
At least 10% of the total budget should be allocated for reserves
11 Is project part of a “Master” or “Umbrella” Association?
If yes, additional information may be required for eligibility
12 Does any one person or entity own more than one unit?
No single entity may own more than 10% of the total units
13 Are there any pending or outstanding special assessments?
If yes, obtain details and determine the impact on all units and marketability
14 Is the HOA involved in any litigation, mediation, arbitration, or other dispute resolution process?
If yes, obtain details (attorney opinion letter) and determine risk. If litigation affects the structure or marketability , the project inineligible
15 Are there any adverse environmental factors affecting the project as a whole or as individual units?
If yes, the appraiser must address the impact on value and marketability
16 Does the homeowners’ association have a reserve fund separate from the operating account?
At least 10% of the total budget should be allocated for reserves
17 Do the project legal documents include any restrictions on sale which would limit the free transferability of title?
If yes, the only restrictions allowed are age restrictions
Is the unit part of a legally established condominium project, in which common areas are owned jointly by unit
18 owners?
If no, project is ineligible
19a Do unit owners have sole ownership & exclusive right to project facilities?
If no, project is ineligible
19b Are any project facilities (parking, recreation facilities) leased to the HOA?
If yes, project is ineligible
20a Does the project consist of manufactured housing units?
If yes, project is ineligible
20b Are any units less than 400 square feet?
If yes, project is ineligible
Are any of the units used for “live-work” (e.g., the unit owner lives in a loft area and runs a business on the
20c ground floor)?
If yes, project is ineligible
Is the project a Continuing Care Retirement Community or Life Care Facility where residents sign long-term
20d contracts for housing, medical, assisted-living, and other services?
If yes, project is ineligible

21 If a unit is taken over in foreclosure or deed-in-lieu, is the lender responsible for delinquent HOA dues?

If yes, the mortgagee may not be responsible for more than the greater of 6 months ‘ or the maximum amount permitted under applicable state law
22 Does the property operate as a resort hotel; renting units on a daily basis?
If yes, only allowed on a case by case basis with prior management review and approval
23 Is any part of the project used for commercial purposes?
If yes, only allowed on a case by case basis with prior management review and approval

24 Do the project legal documents or local zoning limit the amount of time the owners can live in their unit?
If yes, project is ineligible
25 HOA is named insured on master insurance policy?
If no, project is ineligible
26 Are common elements / limited common elements insured to 100% replacement cost?
If no, project is ineligible
27 Are units or common improvements located in a flood zone?
If yes, flood insurance is required
28 Is the HOA insured for general liability?
If no, project is ineligible
29 Does the HOA provide hazard insurance coverage for the interior (walls-in) of the condominium unit?
If no, the borrower must obtain a separate HO-6 policy
30 Is the HOA insured for Fidelity Bond?
Fidelity bond coverage is required for projects over 20 units , must be $1 million per occurrence and must be at least equal to the greater of 3 months HOA dues or reserves or minimum required by state law.
Minimum number of days required for written notification to be given to HOA or insurance trustee before any
31 substantial changes or cancellation of the project coverage.
Minimum of 10 days required
We certify that the right of first refusal does not adversely impact the rights of a mortgage or its assignee to
foreclose or take title to a condo unit pursuant to the remedies in the mortgage; accept a deed or assignment in lieu of foreclosure in the event of default by a mortgagor; and sell or lease a unit acquired by the mortgagee or
32 assignee.
If no, project is ineligible

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