FREDDIE 2003 PUD - GUIDELINES
PUD Requirements:
· Please submit all PUDs through proper channels to obtain PUD approval.
· All projects must meet FHLMC requirements as follows:
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The individual unit owners own a parcel of land improved with a dwelling. This ownership is not in common with other unit owners.
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The development is administered by a homeowners association that owns and is obligated to maintain property and improvements within the development (for example, greenbelts, recreation facilities and parking areas) for the common use and benefit of the unit owners.
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The unit owners have an automatic, nonseverable interest in the homeowners association and pay mandatory assessments.
Freddie Mac Underwriting Guidelines 12 July 24, 2003
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PUD Requirements (continued):
· Insurance requirements:
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If the individual units are covered by insurance purchased by their respective owners, the PUD homeowners’ association must maintain “all risk” coverage for common areas and property for 100% of their insurable value and providing for loss or damage settlement on a replacement cost basis. The association must also obtain any additional coverage commonly required by private mortgage investors for developments similar in construction, location and use, including the following where applicable and available:
ü Agreed amount
ü Demolition cost
ü Increased cost of construction
ü Boiler and machinery
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The PUD homeowners’ association must maintain coverage on common areas and property for 100% of their insurable value. Deductibles may not exceed the lower of $5,000 or 1% of the applicable amount of coverage.
Funds for such deductibles must be included in the association’s reserves and must be so designated.
Liability Insurance:
- The PUD owners’ association must carry comprehensive general liability insurance covering all common areas, common elements, commercial spaces and public ways in the PUD project.
If not already included in the terms of the coverage, there must be a “severability of interest” endorsement precluding the insurer’s denial of a unit owner’s claim because of negligent acts by the association or other unit owners.
The association must carry any additional coverage commonly required by private mortgage investors for developments similar in construction, location and use, including the following where applicable and available:
Comprehensive automobile liability
Bailee’s liability
Elevator collision liability
Garage keeper’s liability
Host liquor liability
Worker’s compensation and employer’s liability
Contractual liability
The insurer’s limit of liability per occurrence for personal injury, bodily injury or property damage under the terms of the above coverage’s must be at least $1Million
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** Poster Recommendation: compare subject's HOA structure, Individual Property Owners' ownership of both the HOA and common area lot ownership, etc. with the ABOVE requirements for PUD underwriting to determine IF the subject's "HOA" MEETS Freddies Criteria for a PUD.
