Mortgage Loans in Single Family Attached - Condominium Projects

As a result of recent changes in the requirements by FHA and Fannie Mae, Participating Lenders originating loans on condominiums must be prepared to provide interior unit coverage ("walls in" HO-6 policy) unless the Participating Lender can document that the master policy provides the same interior unit coverage. This policy must include coverage for replacement of improvements and betterment coverage to cover any improvements that the Borrower may have made to the unit.

The HO-6 policy is in addition to the condominium association blanket insurance policy reflecting a minimum of one million dollars ($1,000,000) coverage and a maximum of ten thousand dollars ($10,000) deductible.

The premiums for the HO-6 are paid by the Borrower and must be included in the amount escrowed by CHFA for hazard insurance.

As a reminder - for all Mortgage Loans to finance condominiums, the following documentation must be included in the Program Compliance Review package:

1. The Participating Lender must provide CHFA acceptable Condominium Approval Documentation that is required by the insurer/guarantor for the individual loan being delivered to CHFA at the time of loan closing.
   
   
2. A completed condominium questionnaire or condominium appraisal containing accurate project information. This must reflect minimum insurer/guarantor owner occupancy requirements. CHFA has provided CHFA Form 721, Condominium Questionnaire, which is available in HomeConnection as an option for the Participating Lender.
   
   
3. Copy of the blanket insurance policy reflecting a minimum of one million dollars ($1,000,000) coverage and a maximum of ten thousand dollars ($10,000) deductible.
   
   
4. Copy of HO-6 policy a.k.a. "walls-in" coverage policy unless the Participating Lender can document that the master policy provides the same interior unit coverage as an HO-6 policy, including coverage for replacement of improvements and betterment coverage to cover any improvements that the Borrower may have made to the unit.
   
   
5. Copy of the HOA Certificate of Good Standing from the Secretary of State website. http://www.sos.state.co.us/biz/BusinessEntityCriteria.do.

These requirements are effective immediately.

Please contact the Home Finance Division with any questions.

303.297.7376 or 1.888.320.3688 Denver
970.241.2341 or 1.800.877.8450 Western Slope
 

Thank you,
CHFA Home Finance