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Are reserve funds required by Fannie may , freddy Mack For loans by them to purchase a condo. Will I get a loan if they do not have a reserve fund?
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Hi.
Im a superintendent on the upper eastside, im looking for a building on the westside or lower easrside.
I have 16 years experience.
joserivera124@hotmail.com
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Most lenders have been enforcing the Fannie/Freddie reserves rule--which has actually been on the books for a long time--for the past year. In a nutshell, it states that the association a] must have a budget line item for reserve funds contribution, & b] that it be at least 10% of total budgeted expenses.
There is NO requirement that these funds actually be deposited in reserves.
They do NOT care how much money is actually in reserve accounts, now or historically. [Your reserve could have $10 or $10,000,000; it's not a factor.]
Absurd? Yes...but that's the rule, & exceptions are rare.
The good news is that any banker should be able to tell you up front--before you submit an app or pay a fee, if your building qualifies.
The only time you need not be concerned with this rule is when lenders--typically local &/or small--plan to hold the mortgage in their own portfolio. If they're not reselling, they don't care about Fannie/Freddie rules.
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