A condo certification is required by Fannie Mae/Freddie Mac on condo loans to evaluate the risk, eligibility, insurance coverage, and resale potential of the condominium project.
The certification is required to assess the financial stability and management of the condo complex. It provides crucial information about the number of units, owner-occupied versus rental units, pending litigations, and the overall financial health of the homeowner’s association (HOA). The certification also ensures that the condo project has adequate insurance coverage, protecting both the lender and borrower from liability risks. Additionally, it helps lenders determine the marketability and potential resale value of the condo, considering factors such as sales activity and any restrictions on selling or renting units. By obtaining a condo certification, your lender can make an informed decision, mitigating the risks associated with condo ownership and safeguarding their investment in the loan.