Condominium Project and Disaster Assistance Updates
Freddie Mac issued Bulletin 2018-13, announcing Single-Family Seller/Servicer Guide updates to Condominium Project deductible and insurance requirements.
- if governing documents of a condominium homeowners association (HOA) call for a unit owner to insure their unit individually, in place of a master HOA policy, Freddie now allows for a condominium unit, including 2- to 4-unit project units, to be insured through an individual policy. Common elements must remain covered through the condominium HOA policy.
- if condominium governing documents require, condominium units in 2-4 family unit properties may also be insured through an individual flood insurance policy in lieu of a condominium HOA policy for flood insurance.
Additionally, Freddie will now allow condominium projects to have a deductible that exceeds 5% of the building coverage limit if (1) the deductible exceeds the 5% threshold because of a per unit deductible for named perils specific to a geographic area, and a(2) A unit owner’s HO-6 policy meets certain requirements.
The unit owner’s HO-6 policy must:
- Cover the same perils as the condominium HOA policy;
- Cover master policy assessments levied on the unit owner; and
- Carry a sufficient coverage amount to cover the per unit amount over the permissible 5% limit.
To review the impacted Guide sections, associated revisions, and an example of required deductible scenarios, see Freddie Mac Single-Family Seller/Servicer Guide Section 8202.2 and 8202.3.
Publications were recently released by several agencies, including the FHA, FDIC, OCC, FRB, FDIC, NCUA, and the Conference of State Bank Supervisors, which provide reminders of previously issued regulatory guidance and encourage the use of best practices to meet the financial needs of those affected by Hurricane Florence.
Please visit Proctor’s for Disaster Resource Center for guidance and up to date information on disaster response.
Proctor will continue to monitor regulatory requirements and will provide updates as they develop.