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Title Insurance Requirements for FNMA and FHLMC Loans

The interest rates of loans that meet the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) guidelines are some of the lowest available. Despite the fact that in 2019 Fannie Mae helped individuals and families to buy, refinance, and rent millions of homes, there are dozens of restrictions and requirements for each transaction. 

Condominium and PUD Unit Mortgages

Fannie Mae has specific requirements for title commitments and research for condominium and planned urban development (PUD) units. The title insurance policy describes all title related matters affecting the property - information that the title agency is responsible for providing.

Subject to the title insurance policy provisions, the owner’s policy includes the following provisions: 

  • For condominium unit and PUD mortgages, specific ALTA endorsements must be attached to each policy and/or incorporated in the text of the policy.
  • The title policy must show that title to the common elements, areas, or facilities is free and clear of any objectionable liens and encumbrances, including any statutory or mechanics' liens for labor or materials related to improvements on the common areas that began before the title policy was issued.
  • In cases where unit owners own the common areas of the project, the policy for each unit mortgage must reflect that ownership. If the HOA owns the common areas separately, those properties would not be part of the owner's legal description nor generally covered by title insurance.

Subject to the title policy provisions, the lender’s policy includes the following provisions: 

  • The mortgage is superior to any lien for unpaid common expense assessments.
  • It must specifically insure against any loss that results from a violation that existed as of the date of the policy.
  • The mortgage loan is secured by a unit in a condominium project that has been created in compliance with the applicable enabling statutes.
  • Real estate taxes are assessable and liens cannot be held against the project as a whole.
  • The current owner of a PUD unit is a member of the homeowners' association and the membership is transferable.

Co-op Share Loans

When co-op shares are recognized as real property, a title policy should be issued. Required evidence for co-op shares must show that the title is generally acceptable, the borrower has marketable title to the shares, right to occupy the unit, and the co-op corporation has a marketable title to the overall project.

Conventional Construction to Permanent Mortgages

When closed as a single transaction for both the construction loan and the permanent financing, the policy is dated concurrently with the date of the mortgage and typically includes a "pending disbursements" clause, a final endorsement to the title policy that extends the date of the coverage to the later of the final construction advance date or the endorsement date.

Contact Upland Title Agency

Upland Title Agency serves Florida real estate and mortgage industry professionals looking for a high-quality alternative to the standard title agency experience. We are equipped to handle complex, high-volume, and time-sensitive FNMA and FHLMC title work at a competitive price point. Contact us at: 786-687-3295 - to discover how working with Upland Title Agency can improve the way you close deals.


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