B4-2.2-06, Project Eligibility Review Service (PERS) (12/15/2021)

Required for:

• new condo project consisting of manufactured homes;

• co-op project consisting of manufactured homes;

• PUD or condo project consisting of single-wide manufactured homes;

• newly converted non-gut rehabilitation condo and co-op projects with attached units that contain more than four units;

• new and newly converted condo projects consisting of attached units located in Florida; and

• limited or shared equity co-op projects, provided the limited or shared equity provisions are designed to preserve or promote access to affordable housing.

Optional for:

• all other new or newly converted condo projects, not listed above.

Required for:

• established condo or PUD project consisting of manufactured homes that are subject to a community land trust, deed restriction, leasehold estate, or shared equity arrangement.

• established condo projects.

The lender performs a review to determine if the project satisfies all applicable Fannie Mae project eligibility and underwriting requirements of the Full Review process prior to submission to PERS.

See below for additional lender pre-PERS submission review requirements

• for newly converted non-gut rehabilitation condo projects, and

• for projects consisting of manufactured homes.

The lender completes a project submission package, that includes:

• Project Eligibility Review Service Document Checklist (Form 1030) for condo projects or Project Eligibility Review Service Document Checklist - Co-op Projects (Form 1078), for co-op projects, and

• Application for Project Approval (Form 1026).

See below for additional forms that may be required.

• A qualified attorney engaged by the lender must review the condo project legal documents and determine that the documents are in compliance with Fannie Mae's requirements.

• This determination must be documented by the attorney in writing but need not rise to the level of a formal, written legal opinion. The attorney may be the same person who prepared the legal documents or an attorney employed by the lender, but they cannot be an employee, principal, or officer of the developer or sponsor of the project.

• The lender must complete the Warranty of Condominium Project Legal Documents (Form 1054) and attach the attorney review as part of the PERS submission process.

For condo projects—The condo project must comply with all requirements of the Full Review (as provided in B4-2.2-02, Full Review ProcessB4-2.2-02, Full Review Process and B4-2.2-03, Full Review: Additional Eligibility Requirements for Units in New and Newly Converted Condo ProjectsB4-2.2-03, Full Review: Additional Eligibility Requirements for Units in New and Newly Converted Condo Projects).

For co-op projects—The co-op project must comply with all requirements for co-op projects (as provided in  B4-2.3-02, Co-op Project EligibilityB4-2.3-02, Co-op Project Eligibility, B4-2.3-03, Legal Requirements for Co-op ProjectsB4-2.3-03, Legal Requirements for Co-op Projects, and B4-2.3-05, Geographic-Specific Co-op Project ConsiderationsB4-2.3-05, Geographic-Specific Co-op Project Considerations).

• reserves to adequately support the costs identified in the reserve study, and

• a utility contingency of at least 10% of the previous year's utility costs if the utilities are not separately metered.

Review all aspects of the project to determine that it satisfies Fannie Mae eligibility requirements as stated in B4-2.1-01, General Information on Project StandardsB4-2.1-01, General Information on Project Standards.

Review all aspects of the project to determine that it meets all eligibility requirements for the Full Review for condos or co-ops, requirements for PUDs, and any other applicable requirements.

Review the manufactured housing unit to confirm that it meets all requirements of B4-1.4-01, Factory-Built Housing: Manufactured HousingB4-1.4-01, Factory-Built Housing: Manufactured Housing.

Perform a thorough underwriting analysis of the project and provide the conclusion of such analysis.

• Application for Approval of Established Project (Form 1091).

• Condominium Project Questionnaire (Form 1076), or a substantially similar form, completed within the past 180 days.

• An appraisal report for a representative unit in the project. This report must be prepared within 120 days of the PERS application, and include photographs of the project, private streets, recreational amenities, parking, commercial space, and common areas.

• Current fiscal year’s approved operating budget that reflects homeowners’ association income and expenses.

• Reserve study completed within the past 24 months (only required for projects that are not funding a minimum of a 10% dedicated expense allocation in the budget to a replacement reserve for the future repair/replacement of the project’s major components).