Additional Requirements for New or Newly Converted Projects

When performing a Full Review of new or newly converted condo projects, underwriters must ensure compliance with the following additional requirements.

	The project, or the subject legal phase, must be “substantially complete” . There may not be more than one legal phase per building. “Substantially complete” means that a certificate of occupancy or other substantially similar document has been issued by the applicable governmental agency for the project or subject phase; and all the units and buildings in the legal phase in which the unit securing the mortgage is located are complete, subject to the installation of buyer selection items, such as appliances. Note: Homium does not require the installation of typical buyer selection items such as appliances, floor coverings, counter tops, or light fixtures that are common and customary for the market, although buyer selections that involve the modification of a unit floor plan must be complete. Underwriters are expected to obtain appropriate documentation to verify that all buyer selection items for the unit being financed are properly installed prior to closing.
	At least 50% of the total units in the project or subject legal phase must have been conveyed or be under contract for sale to principal residence or second home purchasers. For a specific legal phase or phases in a new project, at least 50% of the total units in the subject legal phase(s), considered together with all prior legal phases, must have been conveyed or be under contract for sale to principal residence or second home purchasers. For the purposes of this review process, a project consisting of one building cannot have more than one legal phase.
	Individual units in new condo projects must be available for immediate occupancy at the time of loan closing.
	If the project is part of a larger development, and the unit owners are required to pay monthly assessments of more than $50 to a separate master association for that development, underwriters must review the overall development plan for the master association to evaluate the acceptability of the project.
	The overall development plan of the project must be reviewed and the following must be acceptable: consistency of future and existing improvements, time limitations for expansion, and reciprocal easements between legal phases.
	For projects (or the subject legal phase) that are only substantially complete rather than 100% complete, underwriters must determine that acceptable completion assurance arrangements that guarantee the future completion of all project facilities, common elements, and limited common elements have been provided. These assurance arrangements may include cash deposits, letters of credit, assignments of certificates of deposit, or assignments of other assets that can be easily converted to cash. Similar arrangements must be provided to support assurances against construction and structural defects. The assurances must protect each unit against defects that become apparent within one year from the date of its settlement, and cover all common facilities for one year from the date on which units that represent at least 60% of the votes in the HOA have been transferred.
	The developer or sponsor should provide for and promote the unit owners’ early participation in the management of the project.
	The project must meet the condo project legal document requirements in the following section.