General Information on Project Standards

Homium’s Project Risk Overview

The quality of mortgages secured by units in condo, co-op, and planned unit development (PUD) projects can be influenced by certain characteristics of the project or by the project as a whole. Before closing and funding a loan secured by an individual unit in a project, Homium requires that the project meets Fannie Mae's eligibility requirements.

Project eligibility risk is a risk that is distinct from the credit risk presented by individual borrowers. Units located in a project present risk that are also distinct from the risks associated with properties that are not part of a homeowners’ association (HOA) or project. These risks include the following:

• the financial stability and viability of the project;

• the condition and marketability of the project;

• limitations on the unit owner’s ability to control the decision-making for the project, occupy the unit, or utilize the project’s amenities and common elements;

• dissolution of the project and the unit owner’s resulting rights and responsibilities;

• project-level litigation;

• project-level misrepresentation and fraud;

• the inability to cure a mortgage default due to restrictions in the project documents such as, but not limited to, right of first refusal provisions; and

• insurance coverage that is inadequate to protect the project from unexpected losses.

Project eligibility and financial strength are key drivers of credit performance on individual unit mortgages and critical to the long-term success of the project. Homium’s project eligibility and underwriting requirements seek to mitigate project level risks and to ensure that projects are demonstrably well-managed.

Homium’s project standards requirements are intended to address common project types across a broad geographic range. If an underwriter determines that a project does not meet all of Homium’s project eligibility criteria, but feels that the project has merit and warrants additional consideration, the underwriter may request an exception from Homium Executive Management.