B4-2.2-06, Project Eligibility Review Service (PERS) (12/15/2021)
- Overview
- Standard PERS Submission Process
- Required Forms for Standard PERS Submission
- Additional Requirements—For Newly Converted Non-Gut Rehabilitation Condo or Co-op Projects
- Additional Requirements - For Condo, Co-op, and PUD Projects Comprised of Manufactured Homes
- Streamlined PERS Submission Process—For Established Projects
- Approval Designations
- Availability of Project Information
- Decision Expiration Dates
Overview
PERS is a review method available to lenders to submit new, newly converted, and established projects to Fannie Mae to determine eligibility. Some projects must be submitted to PERS while a PERS submission is optional for other projects, as shown in the table below.
Standard PERS Process | Streamlined PERS Process |
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Required for:
Optional for:
|
Required for:
|
Standard PERS Submission Process
The standard PERS submission process is described below:
Step | Action |
---|---|
1. |
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
|
2. |
The lender completes a project submission package, that includes:
See below for additional forms that may be required. |
3. | The condo project's legal documents must comply with the Fannie Mae's requirements listed in
|
.
4. | The lender submits the complete project package, including all relevant supporting documentation, via email using the PERS Project Submission mailbox. See | .
5. | A member of the Project Standards team reviews the package to determine if the project is eligible for approval. |
6. | Upon completion of the review, Fannie Mae issues its decision to the lender via email and posts approved projects on its website. See Condo, Co-op, and Planned Unit Development (PUD) Eligibility for approved projects listed for each state, the District of Columbia, and the U.S. Virgin Islands. |
7. | Fannie Mae informs the lender of the specific review fee assessed for each PERS submission. Lenders are billed for PERS review fees in their “Monthly Technology Invoice.” For fees, see the Project Eligibility Review Service (PERS) Overview on Fannie Mae's website. |
Required Forms for Standard PERS Submission
The forms shown below are required for a standard PERS submission.
Form | Title | Description |
---|---|---|
1026 | Application for Project Approval | Requires certification that the lender has “underwritten” the project; includes non-residential space, common areas, sales plan, construction warranty, budget, builder/developer information, status of construction, environmental issues, resale restrictions, phasing, project management. |
1029 | Warranty of Project Presales | Requires lender certification of sales and presales information. |
1030 | Project Eligibility Review Service Document Checklist | Checklist confirming all required condo documents have been provided (see below). |
1051 | Project Development/Master Association Plan | Requires lender certification of submitted information; includes master association and sub-association description and structure, common areas, title policy, master association budget, “as-built” survey or master plan. |
1054 | Warranty of Condominium Project Legal Documents | Requires lender certification of compliance with laws and Fannie Mae legal requirements. |
1071 | Statement of Insurance and Fidelity Coverage | Requires lender certification of all insurance requirements; addresses specific insurance types and clauses, and requires the lender to obtain and review all policies. |
1073 | Individual Condominium Unit Appraisal | Individual condominium appraisal report. |
1073A | Analysis of Annual Income and Expenses – Operating Budget | Requires lender certification that the operating budget has been analyzed; detailed operating budget information to be completed by HOA and lender. |
1078 | Project Eligibility Review Service Document Checklist - Co-op Projects | Checklist confirming all required co-op documents have been provided (see below). |
1079 | Limited or Shared Equity Co-op Worksheet | Requires information for certain co-op projects. |
1081 | Final Certification of Substantial Project Completion | Lender certification that project is substantially complete; lender to document any exceptions or uncompleted. |
Additional Requirements—For Newly Converted Non-Gut Rehabilitation Condo or Co-op Projects
A non-gut rehabilitation refers to the renovation of a property that does not involve structural or functional changes, such as the replacement of all HVAC and electrical components. Rather, the rehabilitation might include, for example, the replacement of appliances and carpeting.
In order for a newly converted non-gut rehabilitation condo or co-op project to receive project approval through the standard PERS process, the project must comply with the following requirements.
✓ | Lender Pre-PERS Submission Review Requirements –
For Newly Converted Non-Gut Rehabilitation Condo or Co-op Projects |
---|---|
The project cannot be an ineligible project in accordance with | .|
For condo projects—The condo project must comply with all requirements of the Full Review (as provided in and ).For co-op projects—The co-op project must comply with all requirements for co-op projects (as provided in , , and ). |
|
All rehabilitation work involved in the condo or co-op conversion must have been completed in a professional manner. | |
A current reserve study prepared by a qualified, independent professional company, accompanied by an engineer's report, or functional equivalent, must comment favorably on the structural integrity of the project and the remaining useful life of the major project components. | |
The project budget must contain line items for
|
|
Funds to cover the total cost of any items identified in the reserve study or engineer's report that need to be replaced within five years from the date of the study must be deposited in the reserve account of the HOA or of the co-op corporation, in addition to the amount stated immediately above. | |
The developer must provide a detailed description of the work proposed or already completed in order for the project units to be ready for sale. | |
Generally, at least 50% of the total condo units or co-op stocks or shares in the project or subject legal phase must have been conveyed or be under contract for purchase to principal residence or second home purchasers. | |
Up to 30% of the units (or of stocks or shares for co-ops) in projects that are subject to rent regulations, which protect tenants from eviction (if they have chosen not to purchase their unit), will be permitted. | |
Phasing of projects (single building or multiple buildings) will be considered on a project basis. | |
The project sponsor or developer must provide a comprehensive sales and marketing strategy. | |
All projects are subject to a site inspection. |
Additional Requirements - For Condo, Co-op, and PUD Projects Comprised of Manufactured Homes
For a condo, co-op, or PUD project comprised of manufactured homes to receive project approval through the standard PERS process, the project must comply with the following requirements.
✓ | Lender Pre-PERS Submission Review Requirements - For Projects Consisting of Manufactured Homes |
---|---|
Review all aspects of the project to determine that it satisfies Fannie Mae eligibility requirements as stated in . |
|
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 . |
|
Perform a thorough underwriting analysis of the project and provide the conclusion of such analysis. |
Streamlined PERS Submission Process—For Established Projects
The streamlined PERS submission process for established condo projects is as follows:
Step | Action |
---|---|
1. | The lender performs a basic review to determine if the project satisfies all applicable Fannie Mae project eligibility and underwriting requirements prior to submission to PERS. |
2. | The lender completes a project submission package, which includes:
|
3. | The lender submits the complete project package, including all relevant supporting documentation, via email using the PERS Project Submission mailbox. See | .
4. | A member of the Project Standards team reviews the package to determine if the project is eligible for approval. |
5. | Upon completion of the review, Fannie Mae issues its decision to the lender via email and posts approved projects on its website. See Condo, Co-op, and Planned Unit Development (PUD) Eligibility for approved projects listed for each state, the District of Columbia, and the U.S. Virgin Islands. |
6. | Fannie Mae informs the lender of the specific review fee assessed for each PERS submission. Lenders are billed for PERS review fees in their “Monthly Technology Invoice.” For fees, see the Project Eligibility Review Service (PERS) Overview on Fannie Mae's website. |
Fannie Mae reserves the right to request additional documentation it deems necessary to conduct a full review of the project.
Approval Designations
Upon completion of its review, Fannie Mae will issue one of the following project approval designations:
-
Conditional Project Approval,
-
Final Project Approval,
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Ineligible, or
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Suspension of the Application.
Loans delivered with a PERS review must have a valid Fannie Mae Final Project Approval prior to delivery. Loans may not be delivered under the Conditional Project Approval, Ineligible, or Suspension of the Application designations.
Availability of Project Information
Lenders submitting projects to PERS must ensure that the developer, builder, management company, and/or HOA will provide project information to Fannie Mae as and when requested without charge. In the event the requested information is not provided, Fannie Mae reserves the right to withdraw the PERS approval.
Decision Expiration Dates
Conditional Project Approval: expires 9 months from the date of issue.
Final Project Approval: expires 18 months from the date of issue.
Note: Fannie Mae, in some instances and in its sole discretion, may set a shorter or longer expiration term.
For information on requesting an extension, see the Project Eligibility Review Service (PERS) Overview on Fannie Mae's website.
The table below provides references to recently issued Announcements that are related to this topic.
Announcements | Issue Date |
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Announcement SEL-2021-11 | December 15, 2021 |
Announcement SEL-2021-03 | April 07, 2021 |