by usezloan | Aug 12, 2021 | Financial study
융자지식196- MIXED-USE PROPERTIES
MIXED-USE PROPERTIES
For both Fannie Mae and Freddie Mac we will accept mixed-use properties, e.g., beauty shops, doctor’s
office, small grocery, etc., as long as the following guidelines are met:
• Property must be a 1-unit property that the borrower occupies as his or her principal residence
• The mix-use of the property must represent a legally permissible use of the property under local
zoning requirements
• The borrowers must be both the owner and the operator of the business
• The property must be primarily residential in nature
• The market value of the property must be primarily a function of its residential characteristics, rather
than the business use or any special business use modifications that were made.
• The mortgaged premises must be residential. We do not purchase mortgages secured by vacant
land or property used primarily for agriculture, farming, or commercial enterprise.
MULTIPLE PARCELS UNDER ONE MORTGAGE
FANNIE MAE
When the security property consists of more than one parcel of real estate, the following requirements
must be met:
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• Each parcel must be conveyed in its entirety.
• Parcels must be adjoined to the other, unless they comply with the following exception:
o Parcels that otherwise would be adjoined, but are divided by a road, are acceptable if
the parcel without a residence is a non-buildable lot, e.g., waterfront property where the
parcel without the residence provides access to the water. Evidence that the lot is nonbuildable must be provided.
Each parcel must have the same basic zoning, e.g., residential, agricultural
The entire property may contain only one dwelling unit. Limited additional nonresidential improvements, such as a garage, are acceptable. For example, a
home built across both parcels where the lot line runs under the home is
acceptable.
The mortgage must be a valid first lien that covers each parcel.
FREDDIE MAC
When the security property consists of more than one parcel of real estate, the parcels must meet the
following conditions:
• Each parcel must be conveyed in its entirety
• Parcels must be adjoined to the other
• Each parcel must be eligible zoning and residential in nature
• Only one parcel may have a dwelling-unit; limited non-residential improvements such as a
garage are acceptable
• The mortgage must be a valid first lien on each parcel
Flagstar may amend the security instrument to include the conditions under which the adjoining lot
subsequently may be released as security for the mortgage. One such condition is that the outstanding
unpaid principal balance of the mortgage must have the same, or better, relationship to the current
appraised value of the property after release of the adjoining lot that the original mortgage amount had to
the original value of the property at the time we purchased or securitized the mortgage. This can be the
result of property appreciation or the borrower making an additional principal payment to reduce the
mortgage balance to the required level.
OIL, GAS, WATER, AND MINERAL RIGHTS
APPRAISAL REQUIREMENTS
If upon inspection of the property the appraiser observes active drilling, fracking, etc., the appraiser
must comment that the active drilling, fracking, etc. does not materially alter the contour of the property,
the usefulness, or value as of the date of the appraisal. If upon inspection of the property the appraiser
does not observe any active drilling, fracking, etc., no action is require by the appraiser.
FINAL TITLE POLICY REQUIREMENTS
The final title policy must include Environmental Protection, ALTA 9 – Restrictions, Encroachments,
Minerals – Loan Policy.
OIL TANKS
Specific to oil tanks located on a residential property, buried or not buried, Flagstar Bank requires
properties with an oil tank to meet the following guidelines:
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• The appraiser must state oil tanks are common to the area and have no adverse effect on
marketability.
• The appraiser must make a statement that he/she detected no evidence of leakage from the oil
tank.
PLANNED UNIT DEVELOPMENTS (PUD)
For both Fannie Mae and Freddie Mac a planned unit development (PUD) is a development that has all of
the following characteristics:
• The individual unit owners own or have a leasehold interest in a parcel of land improved with a
dwelling. This ownership is not in common with other unit owners.
• The development is administered by a homeowners’ association that owns or has a leasehold
interest in and is obligated to maintain property and improvements within the development, i.e.,
greenbelts, recreation facilities, and parking areas, for the common use and benefit of the unit
owners.
• The unit owners have an automatic, non-severable interest in the homeowners’ association and pay
mandatory assessments.
• Zoning is not a basis for classifying a project or subdivision as a PUD.
• Cannot be an ineligible project. Refer to the Ineligible Projects section of the Conventional
Condominium Guidelines
LIABILITY INSURANCE
Liability Insurance is not required for Type E Projects. Liability Insurance will not be required on Type F
Projects if common areas consist of only minimal amenities, such as entrance gates, parking areas,
greenbelts and grass median strips and does not include any structural improvements or amenities
such as recreational facilities and retention ponds.
FLOOD INSURANCE
Refer to Flood Insurance, Doc. #4603 for coverage requirements
For the purposes of these guidelines, a condominium is not considered a PUD. If a condominium unit is
located in a PUD, the lender must comply with all condominium requirements and warranties. If the PUD
unit or any PUD common property is on a leasehold estate, the project must comply with leasehold estate
requirements.
PRESALE
Fannie Mae
Fannie Mae makes a distinction between an established and a new project as follows:
• A Type E PUD Project is an established planned unit development project in which control
of the owners’ association has been turned over to the unit purchasers. Standard property
guidelines apply to an established PUD property.
• A Type F PUD Project is a new planned unit development project, or in some cases, an
existing PUD project that has not had control of the owners’ association turned over to the
unit purchasers:
o The project cannot have been created by the conversion of existing buildings into a
PUD.
o The project must not include any multi-dwelling units.
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A review of the project is not required for a Type E or Type F if the subject property is a detached
dwelling.
Freddie Mac
Freddie Mac has no pre-sale or other additional guidelines pertaining to the nature of the PUD
project.
PRIVATE WELLS
Subject properties with a water source provided by a shared well, with the well located on another property
must be approved by management. A recorded shared well agreement and title commitment must be
submitted for review. The shared well agreement must provide irrevocable water rights to the subject
property.
REO PROPERTIES
UNEXPIRED RIGHTS OF REDEMPTION
Flagstar will not approve and/or purchase any loan having an unexpired right of redemption unless the
purchase agreement, title, and appraisal all show the same seller who is the original mortgagor.
• Title may show lis pendens notices from the bank or mortgagee
• Purchase contract may indicate a short sale
by usezloan | Aug 12, 2021 | Financial study
융자지식195- MODULAR, PREFABRICATED, PANELIZED, OR SECTIONAL HOUSING ELIGIBILITY- FANNIE MAE
MODULAR HOMES
MODULAR, PREFABRICATED, PANELIZED, OR SECTIONAL HOUSING ELIGIBILITY- FANNIE MAE
MODULAR HOMES
Fannie Mae purchases loans secured by modular homes built in accordance with the Uniform Building
Code administered by state agencies responsible for adopting and administering building code
requirements for the state in which the modular home is installed.
PREFABRICATED, PANELIZED, AND SECTIONAL HOMES
Loans secured by prefabricated, panelized, or sectional housing are eligible for purchase. These
properties do not have to satisfy HUD’s Federal Manufactured Home Construction and Safety
Standards or the Uniform Building Codes that are adopted and administered by the state in which the
home is installed. The home must conform to local building codes in the area in which it will be located.
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MODULAR, PREFABRICATED, PANELIZED, ANDSECTIONAL HOUSING REQUIREMENTS
Factory-built housing such as modular, prefabricated, panelized, or sectional housing is not considered
manufactured housing and is eligible under the guidelines for one-unit properties. These types of
properties must:
• be built of the same quality of materials as and assume the characteristics of site-built housing,
• be legally classified as real property, and
• conform to all local building codes in the jurisdiction in which they are permanently located.
The purchase, conveyance, and financing (or refinancing) must be evidenced by a valid and
enforceable first-lien mortgage or deed of trust that is recorded in the land records, and must represent
a single real estate transaction under applicable state law. The lender is responsible for perfecting the
real estate title and obtaining any needed title endorsements before selling the loan to Fannie Mae
when a unit is titled as personal property similarly to manufactured homes.
All factory-built units must be permanently attached to a foundation that meets the standards for local
building codes where the unit will be placed and in accordance with the recommendations prescribed
by the unit’s manufacturer (when applicable). If the unit had axles, wheels, tow hitch, or other hardware
to facilitate ease of transportation to the site, the lender is responsible for ensuring that all such
hardware is removed prior to selling the loan to Fannie Mae.
Fannie Mae affords modular, prefabricated, panelized, or sectional housing homes the same treatment
as site-built housing. Therefore, Fannie Mae does not have minimum requirements for width, size, roof
pitch, or any other specific construction details.
MODULAR CONSTRUCTION TECHNIQUES ON MULTI-UNIT BUILDINGS
Multi-unit buildings such as condos, co-ops, and townhomes may be constructed, in whole or in part,
through the use of modular construction techniques. All buildings must conform to local building codes
in the jurisdiction in which they are permanently located. Units in these buildings are provided the same
treatment as units in multi-unit buildings constructed with site-built techniques.
by usezloan | Aug 12, 2021 | Financial study
융자지식194- MANUFACTURED HOMES
MANUFACTURED HOMES
Flagstar Bank will only purchase loans secured by double-wide manufactured homes under fixed-rate
programs. Conventional transactions must be Fannie Mae eligible. Refer to the 9000 Government
Guidelines section for FHA and VHA transaction guidelines. Transactions must be rate/term refinances of
Flagstar Bank serviced loans.
Any dwelling-unit built on a permanent chassis and attached to a permanent foundation system is a
manufactured home for purposes of underwriting. Other factory-built housing, not built on a permanent
chassis, such as a modular, prefabricated, panelized, or sectional housing is not considered manufactured
housing and continues to be eligible.
Flagstar Bank specifies certain eligibility criteria that apply to any mortgage that is secured by a
manufactured home. The manufactured home unit must be permanently affixed to a foundation and must
assume the characteristics of site-built housing. The wheels, axles, and trailer hitches must be removed
when the unit is placed on its permanent site. All foundations, both perimeter and piers, must have footings
that are located below the frost line. If piers are used, they should be placed where the unit manufacturer
recommends. If state law requires anchors, they must be provided. Flagstar Bank will not purchase loans
secured to single-wide manufactured homes or manufactured homes located within a condominium project.
TRANSACTION REQUIREMENTS
The following criteria must be met:
• Loan must be a rate and term refinance of the Flagstar Bank serviced loan.
• Principal residences and Second Homes only, no investment properties.
• Subordinate financing is not permitted.
• All closing documents must be ordered through Flagstar Bank’s Web-Based Closing Documents
(WBCD) with a fully executed Manufactured Home Rider.
• All manufactured homes must be appraised by a Flagstar approved Appraisal Management
Company.
• Manufactured homes that have been deconstructed and moved to another property are not
eligible.
• See current rate sheet and/or Flagstar pricing engine for any additional adjustments to pricing.
Temporary buy-downs are not eligible.
APPRAISAL AND DOCUMENTATION REQUIREMENTS
A manufactured home must be a one-family dwelling-unit that assumes the characteristics of site-built
housing and is legally classified as real property. The purchase, conveyance and financing, or
refinancing, of the land and the manufactured home, which must be evidenced by a valid and
enforceable first lien mortgage or deed of trust that is recorded in the land records, must represent a
single real estate transaction under applicable state law. A combination chattel and real estate
mortgage is not acceptable.
Visit the Fannie Mae website, Titling Manufactured Housing for state-specific guidelines.
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The appraiser must state the subject property is taxed as Real Property or if the property is new
construction, the title company must supply a statement that the subject property will be taxed as Real
Property. An ALTA 7 endorsement, manufactured housing endorsement, must accompany all title work
for a manufactured home. This endorsement should ensure that the land described in the policy as the
insured property includes the manufactured housing-unit located on the land at the date of the policy.
Flagstar Bank underwriting department requires complete title work prior to closing to be reviewed by
Underwriting on all manufactured home transactions, in addition to a copy of the homeowners’
insurance policy showing the dwelling coverage equal to at least the mortgage balance or replacement
cost new generated by the appraiser.
ADDITIONAL WARRANTIES
• The financing must be evidenced by a mortgage or deed of trust recorded in the land records. A
combination of a chattel and real estate mortgage is not acceptable.
• The manufactured home must be built in compliance with the Federal Manufactured Home
Construction and Safety Standards that were established June 15, 1976, as amended and in
force at the time the home is manufactured, and that appear in HUD regulations 24 C.F.R. Part
3280. Compliance with these standards will be evidenced by the presence of a HUD Data Plate.
The HUD Data Plate/Compliance Certificate is a paper document located on the interior of the
subject property that contains, among other things, the manufacturer’s name and trade/model
number. In addition to the data required by Fannie Mae, the data plate includes pertinent
information about the unit including a list of factory-installed equipment. The HUD Certification
Label is a metal plate, sometimes referred to as a HUD seal or tag, located on the exterior of
each section of the home. Flagstar Bank will not accept any manufactured home built before
1976.
• The manufactured home must be permanently affixed to a foundation system that is appropriate
for soil conditions for the site and is designed to meet local and state codes.
• The manufactured home certificate of title must be surrendered in all non-title holding states.
For title holding states, the certificate of title must be perfected with Flagstar Bank as the sole
lien holder.
• The mortgage amount cannot include the financing of furniture, mortgage life insurance or any
other form of insurance, other than hazard, flood, mortgage, and title insurance. However, the
financing of kitchen and laundry appliances and carpeting may be included in the mortgage.
• The borrower must sign a written statement acknowledging his or her intent that the unit is a
fixture and part of the real property securing the mortgage.
• The manufactured home must be permanently connected to a septic tank or sewage system
and to other utilities in accordance with local and state requirements.
• Property is zoned 1 to 4-unit, residential
• The manufactured home is a structure that is built on a permanent chassis.
• The manufactured home must have a pitched roof with overhang. The roof covering must be
standard composition shingle, asphalt or fiberglass, or better.
• If the property is not situated on a publicly dedicated and maintained street, then it must be
situated on a street that is community owned and maintained street, then it must be situated on
a street that is community owned and maintain or privately owned and maintained. There must
be adequate vehicular access and there must be an adequate and legally enforceable
agreement for vehicular access and maintenance.
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• The appraiser must also include in the appraisal report the manufacturer’s name, the model
name, year of manufacture, and the serial number for the subject property. This information can
be verified by reviewing the Data Plate/Compliance Certificate that is located inside the
manufactured home.
• The appraiser must address both the marketability and comparability of a manufactured home
by using comparable sales of similar manufactured homes. If at least three comparable sales of
manufactured homes are not available, the appraiser may use either site-built housing or a
different type of factory-built housing as one of the comparable sales. When that is the case, the
appraiser must use at least two comparable sales of similar manufactured homes, explaining
why site-built housing or a different type of factory-built housing is being used for the one
comparable sale and make, and support, appropriate adjustments in the appraisal report. If the
appraiser is unable to fund two comparable sales of similar manufactured homes, the mortgage
is not eligible for delivery to us since the market value of the property cannot be adequately
measured and supported.
• The appraiser must not create comparable sales by combining vacant land sales with the
contract purchase price of a factory-built home, although this type of information may be
included as additional supporting documentation.
• The mortgage must be covered under a standard real estate title insurance policy that covers
the manufactured home as part of the real property that secures the mortgage. This is
evidenced by an ALTA 7 endorsement, or any other endorsements required in the applicable
jurisdiction for manufactured homes that are treated as real estate. A copy of the preliminary
title commitment must be reviewed by underwriting prior to closing.
• The appraisal must be performed on form 1004C. Form 70B is not acceptable.
• Mortgages secured by manufactured homes located on leasehold estates or condominium
projects are ineligible.
• The appraisal must contain at least two manufactured home comparables or else the loan is
ineligible.
• All loans must close with a fully executed Manufactured Home Rider.
• Loans requiring private mortgage Insurance must have a minimum of 900 square feet.
• Manufactured homes that require flood insurance must have a separate flood policy.
• Homeowner/Mobile policies that include flood under one policy are not acceptable under any
circumstances when flood insurance is required. This will not meet investor requirements of
NFIP Cancellation/Nullification Provisions. A separate flood policy is required.
• Manufactured homes in New Jersey constructed prior to 1985 are ineligible.
by usezloan | Aug 12, 2021 | Financial study
융자지식193- LEASEHOLDS
LEASEHOLDS
An attorney’s opinion letter stating all warranties are met will be required on all loans. Letter must specify
the investor under which the warranties have been validated; Fannie Mae, Freddie Mac, or preferably both
Fannie Mae and Freddie Mac. Documents affecting the leasehold estate, including a certified copy of the
lease, must be provided.
FANNIE MAE LEASEHOLD REQUIREMENTS
• Lender retains first-lien enforceability as part of the terms of the lease.
• The mortgage must be secured by the property improvements and the borrower’s leasehold
interest in the land.
• The leasehold estate and the improvements must constitute real property, must be subject to
the mortgage lien, and must be insured by the lender’s title policy.
• Properties held in Land Trusts are not eligible.
• The leasehold estate and the mortgage must not be impaired by any merger of title between the
lessor and lessee or by any default of a sub-lessor.
• The term of the leasehold estate must run for at least 5 years beyond the maturity date of the
mortgage, unless fee simple title will vest at an earlier date in the borrower’s name, home
owners association or a co-op corporation.
• All lease rents, other payments, or assessments that have come due must be paid.
• The borrower must not be in default under any other provision of the lease nor may such a
default have been claimed by the lessor.
• The lease must provide that the leasehold can be assigned, transferred, mortgaged, and sublet
an unlimited number of times by the lessee either without restriction or on payment of a
reasonable fee and delivery of reasonable documentation to the lessor.
• The lessor may not require a credit review or impose other qualifying criteria on any assignee,
transferee, mortgagee, or sub-lessee.
• The lease must provide for the borrower to retain voting rights in any homeowners’ association.
• The lease must provide that the borrower will pay taxes, insurance, and homeowners’
association dues related to the land in addition to those he or she is paying on the
improvements.
• The lease must be valid, in good standing, and in full force and effect in all respects.
• The lease must not include any default provisions that could give rise to forfeiture or termination
of the lease except for nonpayment of the lease rents.
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• The lease must include provisions to protect the mortgagee’s interests in the event of a property
condemnation.
• The lease must be serviced by either the lender that delivers the mortgage to Fannie Mae or the
servicer it designates to service the mortgage.
• The lease must provide lenders with the right to receive a minimum of 30 days’ notice of any
default by the borrower and the option to either cure the default or take over the borrower’s
rights under the lease.
• The lease may, but is not required to, include an option for the borrower to purchase the fee
interest in the land. If the option is included, the purchase must be at the borrower’s sole option,
and there can be no time limit within which the option must be exercised. If the option to
purchase the fee title is exercised, the mortgage must become a lien on the fee title with the
same degree of priority that it had on the leasehold. Both the lease and the option to purchase
must be assignable. The table below provides the requirements for establishing the purchase
price of the land.
Status of Property Improvements Purchase Price of Land
Already constructed at the time the lease is
executed.
The initial purchase price should be established as the
appraised value of the land on the date the lease is
executed.
Already constructed at the time the lease is
executed, and the lease is tied to an external
index, such as the Consumer Price Index (CPI).
The initial land rent should be established as a
percentage of the appraised value of the land on the
date that the lease is executed.
The purchase price may be adjusted annually during the
term of the lease to reflect the percentage increase or
decrease in the index from the preceding year. Leases
may be offered with or without a limitation on increases
or decreases in the rent payments.
Will be constructed after the lease is executed.
The purchase price of the land should be the lower of
the following:
• the current appraised value of the land, or
• the amount that results when the percentage of
the total original appraised value that
represented the land alone is applied to the
current appraised value of
the land and improvements.
For example, assume that the total original appraised
value for a property was $160,000, and the land alone
was valued at $40,000 (thus representing 25% of the
total appraised value). If the current appraised value is
$225,000, $50,000 for land and $175,000 for
improvements, the purchase price would be $50,000
(the current appraised value of the land, because it is
less than 25% of $225,000).
Note: If the lease is tied to an external index, the initial
land value may not exceed 40% of the combined
appraised value of the land and improvements.
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FREDDIE MAC LEASEHOLD REQUIREMENTS
• The Mortgage must be secured by a leasehold interest in the land where there is a
demonstrated market acceptance of this type of property ownership and the property
improvements to be a leasehold Mortgage.
• The leasehold estate and improvements must constitute real property including 1 to 4-unit
properties, planned unit developments and condominiums. A manufactured home is not eligible
to secure a Leasehold Mortgage
• Properties held in Land Trust are not eligible
• The leasehold estate must be covered by an acceptable title insurance policy.
• The lease and any sublease (including all amendments) are recorded in the appropriate land
records.
• The lease is in full force and effect and is binding and enforceable against the lessor (and
sublessor).
• The leasehold estate and Mortgage must not be impaired by any merger of the fee interest and
leasehold interest in the event the same person or entity acquires both interests.
• The term of the leasehold estate must run at least 5 years beyond the maturity date of the
Mortgage unless the fee simple vests at an earlier date
• All basic rent (amount paid for use of the leasehold estate under the terms of the lease or
sublease) and amounts due to taxes, insurance, utilities and use fees or operating expenses
relating to the land and improvements must be current and the borrower must not be in default
under any provision of the lease nor may the lessor have claimed such as default.
• The lease must not preclude the borrower from retaining voting rights in the home owner
association, if applicable.
Required Lease Provisions
• Permit mortgaging of the leasehold (or sub-leasehold) estate.
• Permit assignments of the leasehold (or sub-leasehold) estate, including any improvements
on the leasehold estate, including any improvements on the leasehold estate.
• Provide that in order for a notice of lessee’s default (monetary or non-monetary) to be valid,
the lessor must have sent written notice of the lessee’s default to the leasehold mortgagee
not more than 30 days after such default.
• Provide for the right of the leasehold mortgagee, in its sole discretion, to cure a default for
the lessee’s, or sub-lessee if applicable, account within the time permitted to lessee or take
over the rights under the lease (sublease).
• The lease cannot contain default provisions allowing forfeiture or termination of the lease for
nonmonetary default, except for nonpayment of the ground rent.
• The lease must provide for protection of the mortgagee’s interests including an insurable
interest in the subject property unless otherwise required by law, and interest in the lease,
ground lease community and leasehold estate.
• The lease may, but is not required to, include an option for the Borrower to purchase the fee
interest; provide, however, there is no time limit on when the option must be exercised, and
the lease and option to purchase must be assignable.
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LIFE ESTATES
Properties with Life Estate rights are not eligible. Any properties titled with these provisions must have the
rights removed prior to closing to be considered.
by usezloan | Aug 12, 2021 | Financial study
융자지식192- INELIGIBLE PROPERTIES
INELIGIBLE PROPERTIES
• Properties with more than 1 accessory unit (Granny Unit, In-Law unit, etc.)
• Vacant land or land development properties
• Properties that are not readily accessible by roads that meet local standards
• Income producing farms or ranches (Property must be residential in nature to be eligible)
• Units in condo or co-op hotels
• Boarding houses
• Bed and breakfast properties
• Properties that are not suitable for year-round occupancy regardless of location.
• Properties located on Indian/Native American Tribal Land
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• Properties located in Lava Zones 1 and 2
CHINESE DRYWALL
If Flagstar Bank is made aware that Chinese drywall is currently present or previously existed in the
home, we will not approve, fund, or purchase the loan, regardless of any drywall removal and/or efforts
to cure the damage.
Properties with Chinese Drywall may exhibit any of the following characteristics:
• Corrosion on metal fixtures, wires, or plumbing
• Sulfur odor in home
• Wall board with Made in China or Knauf markings
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