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Fannie Mae Pud Definition

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Tim Hicks (Texas)

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Elite Member
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Jan 15, 2002
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Certified Residential Appraiser
State
Texas
PUD Project Definition

A PUD is a project or subdivision that consists of common property and improvements that are owned and maintained by an HOA for the benefit and use of the individual PUD units. For a project to qualify as a PUD for the purposes of this policy, all of the following requirements must be met:

•each unit owner’s membership in the HOA must be automatic and nonseverable,

•the payment of assessments related to the unit must be mandatory,

•common property and improvements must be owned and maintained by an HOA for the benefit and use of the unit owners, and

•the subject unit must not be part of a condo or co-op project.

Zoning is not a basis for classifying a project or subdivision as a PUD. Units in projects or subdivisions simply zoned as PUDs that include the following characteristics are not defined as PUD projects under Fannie Mae’s policies. These projects

•have no common property and improvements,

•do not require the establishment of and membership in an HOA,

So, I follow this guideline in my reports on Fannie Mae forms. If there are no HOA dues, then I don't mark it as a PUD. This is my most requested change from bank lenders. They will ask me to change it to PUD and "0" HOA dues and send me deed restrictions in title work or details of future HOA dues once the project reaches 75% capacity. It doesn't matter how many times I send them this Fannie Mae definition, they still demand the changes, usually with comments about their investors or lawyers.

How do you handle it? How many of you don't know this definition that has been in the Fannie Mae Selling Guide for years and every current update?
 

CindyR

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
Here is the key to your dilemma. Add the word "if" as in 'if there are assessments'. Many PUDs do not have a monthly HOA fee. But if you screw up and break the rules the HOA will correct the problem for you and file a lien on your property. The property is subject to 'lien supported assessments'. Therefore it is in a PUD.
 

Peter LeQuire

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Joined
Jan 3, 2005
Professional Status
Certified Residential Appraiser
State
Tennessee
And, there are subdivisions with a HOA and such minimal common elements that there are no regular HOA fees, assessments being made when there is some Association irregular expense (maintenance of an entry is an example that comes to mind).
 

residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
I've had them do that. Here's what I write and it stops them.

Dear Lender,
The subject is not a PUD by FNMA guidelines; Thus,asking me to do otherwise is asking me to provide a misleading report. I will not do that.
Thanks for your understanding.
Sincerely,
Res
 

timd354

Elite Member
Gold Supporting Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
So, I follow this guideline in my reports on Fannie Mae forms. If there are no HOA dues, then I don't mark it as a PUD. This is my most requested change from bank lenders. They will ask me to change it to PUD and "0" HOA dues and send me deed restrictions in title work or details of future HOA dues once the project reaches 75% capacity. It doesn't matter how many times I send them this Fannie Mae definition, they still demand the changes, usually with comments about their investors or lawyers.

How do you handle it? How many of you don't know this definition that has been in the Fannie Mae Selling Guide for years and every current update?
If you have a project that is going that has common areas and will have mandatory HOA fees once 75% of the project is sold, then that project is a PUD.
 

nauthead

Senior Member
Joined
Nov 26, 2004
Professional Status
Certified General Appraiser
State
Florida
Having common areas and mandatory HOA fees does not automatically make it a PUD. The common areas must also be owned by the association. The Villages which is located just south of me is not a PUD because the association does not own the common areas (the developed does).
 

timd354

Elite Member
Gold Supporting Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Having common areas and mandatory HOA fees does not automatically make it a PUD. The common areas must also be owned by the association. The Villages which is located just south of me is not a PUD because the association does not own the common areas (the developed does).
If the so called common areas are not owned (or leased) by the HOA (or the unit owners in common) but are owned by some other entity, then those areas are not a common areas but are something else...in the case of The Villages, those areas are owned by community development districts
 

nauthead

Senior Member
Joined
Nov 26, 2004
Professional Status
Certified General Appraiser
State
Florida
Take note of the requirements detailed above "common property and improvements must be owned and maintained by an HOA for the benefit and use of the unit owners".
 

Tim Hicks (Texas)

Thread Starter
Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Are you guys reading the Fannie Mae definition. If there are no mandatory HOA fees, then it is not a PUD by Fannie Mae's definition. It may be a PUD, but not by Fannie Mae's definition or requirements. ALL of their requirements must be met.
 

Tim Hicks (Texas)

Thread Starter
Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Here is the key to your dilemma. Add the word "if" as in 'if there are assessments'. Many PUDs do not have a monthly HOA fee. But if you screw up and break the rules the HOA will correct the problem for you and file a lien on your property. The property is subject to 'lien supported assessments'. Therefore it is in a PUD.
Again read the Fannie Mae definition. No HOA dues, no PUD per definition.
 
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