Compliance remains on the top of our clients’ minds. How does compliance relate to my reserve study? What does compliance mean for my condo? Our team readily addresses questions such as these when working with reserve study firms, property owners, and board members.
For us, compliance means following all local and state guidelines with regards to condominiums, property owner’s associations and their interconnected relation to reserve studies. On a secondary level, but equally important, we follow all FHA and Fannie Mae lending standards. With all of these different goals and rules in mind, we perform reserve studies that are compliant with any of these laws and potential uses.
So, what do all of these operating standards really mean for your property’s compliance?
Guidelines state that you must have 10 percent of your operating budget set aside for reserves or have a reserve study performed. This is absolutely critical for a buyer to get a loan in your condominium. Without liquidity or the ability to get underwritten, the property’s value significantly diminishes.
Fannie Mae’s guidelines also suggest that in the absence of a reserve study, it is the lender’s responsibility to judge if the property’s reserves are adequate. So even without a reserve study, it’s imperative that a board member or representative provides the lender with information that is adequate to meet the rules.
With Fannie Mae underwriting more than 90 percent of the loans in the country, the importance of a reserve study quickly becomes clear.
If you have any questions about compliance, guidelines or laws, our team is happy to help!