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B4-2.2-02, Full Review Process (07/05/2023)

This topic contains information on general eligibility requirements for the Full Review process, including:


The Full Review process is a method for the review of new and established condo projects, co-op projects, and certain manufactured home projects. Lenders performing a Full Review must ensure that the project meets all applicable eligibility requirements.

Unit and Project Types Eligible for Full Review

A Full Review may be performed when the unit securing the loan is an attached unit located in one of the following project types:

  • an established condo project, or

  • a new or newly converted condo project.

A Full Review may also be performed when the property securing the loan is a manufactured home in an established condo project that is not subject to a community land trust, deed restriction leasehold estate, or shared equity arrangement.

These projects may also be reviewed by Fannie Mae through the PERS process (see B4-2.2-06, Project Eligibility Review Service (PERS)B4-2.2-06, Project Eligibility Review Service (PERS)).

Full Review requirements for units in co-op projects are addressed in  B4-2.3-02, Co-op Project EligibilityB4-2.3-02, Co-op Project Eligibility.

Condo Project Manager (CPM)

Lenders must use CPM to assist in their Full Review of a condo project (except for projects containing manufactured homes). CPM is a Web-based tool designed to facilitate the lender's review of the project to determine if it meets Fannie Mae's project eligibility requirements. The lender must document the loan file with the CPM decision by including the unexpired CPM Certification in the file.

CPM certifications are based solely on the data that the lender enters into CPM. The lender is responsible for reviewing the applicable project documentation to obtain the information needed to complete the project review and enter the data into CPM. The lender is also responsible for ensuring that all data entered into CPM is correct and that the project meets all applicable Fannie Mae eligibility requirements.

CPM is available on Fannie Mae's website.

CPM Status Designations

The table below describes the status designations that are available in CPM for each project.

Status Designation Definition
Certified by Lender Loans in the project are eligible for sale by the certifying lender prior to the expiration date.
Approved by Fannie Mae Project has been approved by Fannie Mae, and loans may be sold with a valid and unexpired approval by any lender. This status may include projects approved through the PERS or other Fannie Mae approval processes.
Conditional Approval Project has been approved by Fannie Mae through the PERS process subject to certain conditions being met. Loans in this project cannot be sold to Fannie Mae until an Approved by Fannie Mae status has been issued.
No Fannie Mae Review Lender can certify the project or subject legal phase based on the Selling Guide requirements.

Project has been determined by Fannie Mae to be ineligible. Loans for units in this project cannot be sold to Fannie Mae.

Guide Ineligible Based on information entered in CPM by the lender, loans in this project are not eligible for sale to Fannie Mae.
Incomplete Certification Project has been entered into CPM, but the lender's certification process has not been completed. The required information must be entered into CPM for the lender to determine the project's eligibility.


CPM Delivery Restrictions Notifications

Project transaction eligibility or other loan-level restrictions will display in CPM. When CPM displays a delivery restriction for a specific project, lenders may only sell loans that comply with the stated restrictions.

For example, loans in some projects may be limited to certain occupancy types (such as principal residences only, or principal residences and second homes) or there may be limits on the LTV ratios.  

Additional Obligations of the Lender for Projects Approved by Fannie Mae

If a lender becomes aware of any information that could impact the eligibility status reflected in CPM (such as, significant deferred maintenance or major litigation), the lender must notify the CPM Management team (see  E-1-02, List of ContactsE-1-02, List of Contacts) with the relevant data and information. Fannie Mae will evaluate the new information and its impact on eligibility. Before selling a loan secured by a unit in such a project, the lender must confirm that the project retains its approved status. Notification must occur as soon as practicable but no later than five business days after becoming aware of such information.

Fannie Mae reserves the right to change a project eligibility status designation if information acquired after approval or certification has an impact on a previously issued eligibility determination.

Note: Lenders are responsible for verifying and documenting that the project meets the applicable insurance requirements described in Chapters B7-3 and B7-4. Fannie Mae does not review insurance policies as part of the review process.


Full Review Eligibility Requirements

When determining the eligibility of a condo project on the basis of a Full Review, lenders must ensure the condo project meets the eligibility requirements described in the following table.

Full Review Eligibility Requirements
  The project meets the Requirements Applicable to All Properties in a Condo, Co-op, or PUD Project described in B4-2.1-01, General Information on Project StandardsB4-2.1-01, General Information on Project Standards.
  The project must not be an ineligible project as described in  B4-2.1-03, Ineligible ProjectsB4-2.1-03, Ineligible Projects.
  No more than 15% of the total units in a project are 60 days or more past due on common expense assessments (also known as HOA fees). For example, a 100–unit project may not have more than 15 units that are 60 days or more past due.

This ratio is calculated by dividing the number of units with common expense assessments that are past due by 60 or more days by the total number of units in the project.

  No more than 15% of the total units in a project are 60 days or more past due in the payment of each special assessment.
  Lenders must review the HOA projected budget to determine that it
  • is adequate (that is, it includes allocations for line items pertinent to the type of condo project), and

  • provides for the funding of replacement reserves for capital expenditures and deferred maintenance that is at least 10% of the budget.

To determine whether the association has a minimum annual budgeted replacement reserve allocation of 10%, the lender must divide the annual budgeted replacement reserve allocation by the association’s annual budgeted assessment income (which includes regular common expense fees).

The following types of income may be excluded from the reserve calculation:

  • incidental income on which the project does not rely for ongoing operations, maintenance, or capital improvements;

  • income collected for utilities that would typically be paid by individual unit owners, such as cable TV or Internet access;

  • income allocated to reserve accounts; and

  • special assessment income.

The lender may use a reserve study in lieu of calculating the replacement reserve of 10% provided the following conditions are met:

  • the lender obtains a copy of an acceptable reserve study and retains the study and the lender’s analysis of the study in the project approval file,

  • the study demonstrates that the project has adequate funded reserves that provide financial protection for the project equivalent to Fannie Mae’s standard reserve requirements,

  • the study demonstrates that the project’s funded reserves meet or exceed the recommendations included in the reserve study, and

  • the study meets Fannie Mae’s requirements for replacement reserve studies listed at the end of this section.

  For projects in which the units are not separately metered for utilities, the lender must
  • determine that having multiple units on a single meter is common and customary in the local market where the project is located, and

  • confirm that the project budget includes adequate funding for utility payments.

  The project must be located on contiguous parcels of land. It is acceptable for a project to be divided by public or private streets.
  The structures within the project must be within a reasonable distance from each other.
  Common elements and facilities, such as recreational facilities and parking, must be consistent with the nature of the project and competitive in the marketplace.
  Unit owners in the project must have the sole ownership interest in, and rights to the use of the project’s facilities, common elements, and limited common elements, except as noted below.

Shared amenities are permitted only when two or more HOAs share amenities for the exclusive use of the unit owners. The associations must have an agreement in place governing the arrangement for shared amenities that includes the following:

  • a description of the shared amenities subject to the arrangement;

  • a description of the terms under which unit owners in the project may use the shared amenities;

  • provisions for the funding, management, and upkeep of the shared amenities; and

  • provisions to resolve conflicts between the associations over the amenities.

Examples of shared amenities include, but are not limited to, clubhouses, recreational or fitness facilities, and swimming pools.

The developer may not retain any ownership interest in any of the facilities related to the project. The amenities and facilities—including parking and recreational facilities—may not be subject to a lease between the unit owners or the HOA and another party. Parking amenities provided under commercial leases or parking permit arrangements with parties unrelated to the developer are acceptable.

  Fannie Mae permits the financing of a single or multiple parking space(s) with the mortgage provided that the parking space(s) and subject unit are included on one deed as evidenced on the legal description in the mortgage. In such cases, the LTV, CLTV, and HCLTV ratios are based on the combined value of the residential unit and the parking space(s).
  Phase I and II environmental hazard assessments are not required for condo projects unless the lender identifies an environmental problem through the performance of its project underwriting or due diligence.

In the event that environmental problems are identified, the problems must be acceptable, as described in E-2-02, Suggested Format for Phase I Environmental Hazard AssessmentsE-2-02, Suggested Format for Phase I Environmental Hazard Assessments.

  For investment property transactions in established projects at least 50% of the total units in the project must be conveyed to principal residence or second home purchasers. This requirement does not apply if the subject mortgage is for a principal residence or second home.

Financial institution-owned REO units that are for sale (not rented) are considered owner-occupied when calculating the 50% owner-occupancy ratio requirement.

  If the project was a gut rehabilitation project, all rehabilitation work involved in a condo conversion must have been completed in a professional manner.

“Gut rehabilitation” refers to the renovation of a property down to the shell of the structure, including the replacement of all HVAC and electrical components (unless the HVAC and electrical components are up to current code).

For a conversion that was legally created during the past three years, the architect’s or engineer’s report (or functional equivalent), that was originally obtained for the conversion must comment favorably on the structural integrity of the project and the condition and remaining useful life of the major project components, such as the heating and cooling systems, plumbing, electrical systems, elevators, boilers, roof, etc.

Note: If the project is a newly converted non-gut rehabilitation project with more than four residential units, lenders must submit the project to Fannie Mae for review and approval. See B4-2.2-06, Project Eligibility Review Service (PERS)B4-2.2-06, Project Eligibility Review Service (PERS), for additional information.

Additional Requirements - For Condo Projects Consisting of Manufactured Homes

When determining the eligibility of condo project consisting of manufactured homes on the basis of a Full Review, lenders must ensure the property and project meet the eligibility requirements described in the following table.

Additional Requirements for Condo Projects Consisting of Manufactured Home Units
  As described in  B4-2.2-06, Project Eligibility Review Service (PERS)B4-2.2-06, Project Eligibility Review Service (PERS), certain manufactured home projects must be submitted to PERS. Lenders must perform a pre-PERS submission review to confirm the project meets the Full Review and other requirements.
  The condo project must meet all Full Review requirements, as applicable.

CPM should not be used to complete the Full Review because it does not contain all the requirements that apply to condo projects consisting of manufactured homes.

  The project must not contain campgrounds or other facilities for transient or mobile units.
  The project legal documents must require a provision for land-lease “hold-out” units to be converted into the condo structure upon transfer, sale, or refinance of property. Land lease “hold-out” units are limited to 25% or less of the total units in the project.

Land-lease hold-out units are units where the structure is owned by an individual, but the land is leased from the HOA or project sponsor. These units were not converted to condo ownership when the project converted to a condo regime.

Replacement Reserve Studies

Reserve studies may be used to determine the appropriate level of reserves the HOA must maintain to ensure the project’s long-term success. Reserve studies will also provide useful information regarding the adequacy of the HOA’s current reserve funds and offer recommendations to meet funding goals in the event the HOA has under-reserved for its needs in the past. The lender may review the most current reserve study or a reserve study update provided it has been completed within three years of the date on which the lender approves the project.

Reserve studies must be prepared by an independent third party that has specific expertise in completing reserve studies. This expertise may include any of the following:

  • a reserve study professional with reserve study credentials,

  • a construction engineer,

  • a certified public accountant who specializes in reserve studies, or

  • any professional with demonstrated knowledge of and experience in completing reserve studies.

While Fannie Mae does not require that a standard format be used for the reserve study, the following items must be addressed:

  • all major components and elements of the project’s common areas for which repair, maintenance, or replacement is expected;

  • the condition and remaining useful life of each major component;

  • an estimate of the cost of repair, replacement, restoration, or maintenance of major components;

  • an estimate of the total annual contributions required to defray costs (minus the existing reserves funded for this purpose), including inflation;

  • an analysis of existing funded reserves; and

  • a suggested reserve funding plan.

Note: Individual states may have various statutes concerning the use and content of reserve studies. Fannie Mae requires that a reserve study used by the lender in its analysis meet or exceed requirements set forth in relevant state statutes.

Recent Related Announcements

The table below provides references to the Announcements that are related to this topic.

Announcements Issue Date
Announcement SEL-2023-06 July 05, 2023
Announcement SEL-2023-02 March 01, 2023
Announcement SEL-2022-02 March 02, 2022