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PART II: Fannie And Freddie Condo & HOA Questionnaires Critiqued By Experts

The new federal financial disclosure questionnaires targeting borrowers who reside in condominium associations and homeowner associations (HOAs) are a good start towards standardization, but they are incomplete in many ways, real estate experts say.

The Uniform Mortgage Data Program®, an initiative of the Federal Housing Finance Agency, Freddie Mac and Fannie Mae, are designed to provide greater consistency and financial clarity for lenders as they work to collect information to determine eligibility for mortgages secured by units in more than 350,000 condominium and HOA projects where 70 million Americans live.

“One major omission in the Uniform Mortgage Data Program® questionnaires is there is no disclosure of who pays the document fees necessary to gather the information in the forms,” noted Sara E. Benson, president of Association Evaluation, LLC, a Chicago-based real estate data analytics firm that has more than 50,000 Illinois condominium associations and HOAs in its database.

Condominium association and HOA document fees include, but are not limited to the following:

• Private “transfer or resale fees”. These frequently include master-association and sub-association transfer fees typically charged by management companies that can cost hundreds or thousands of dollars. Fees can involve a simple name change on a roster and/or a mailbox when a condo is sold.

• Document delivery fees. These often are electronic—not paper—copies of numerous documents that a new owner should receive before committing to a home purchase.

Documents include: budgets, board minutes, bylaws, the declaration of covenants, conditions and restrictions (CC&Rs), disclosures (including filling out the questionnaires), reserve studies, audits, financial statements, and corporate certificate of good standing.

“Who pays these fees? And, how much is paid to the preparer of the Fannie Mae/Freddie Mac questionnaire?” Benson asks. “There should be a cap on the dollar amount of fees, or a nominal fee should be charged for the electronic transmission that is already owned by the seller or the developer.”

Experts report that some associations have been found to be charging thousands of dollars to potential borrowers for mere documents and disclosures, plus additional fees ranging from $75 to $1,000 just to complete questionnaires such as the ones Fannie and Freddie are requesting.

“One association in Chicago is charging potential borrower’s $4,000 for a complete ‘condo package’—prior to closing,” Benson said. “If the documents reveal a looming undisclosed $50,000 special assessment associated with the purchase, and the buyer decides to walk away from the deal, there are no refunds of these monies.”

The Home Front column asked Association Evaluation to evaluate and critique omissions and errors in the new Uniform Mortgage Data Program® questionnaires. Key points of the critique follow:

• The date of the most recent budgets, audits—or financial review statement—is not covered on the forms.

• The amount of money in the operating and reserve accounts (if any) as compared to the number of units in the development is not taken into consideration.

• The issue of outstanding association loans and debts are not addressed at all on the forms.

“Owners are guarantors for all of the association’s debts, loans, lawsuits, settlements, liabilities, construction defects, and disaster rebuilds,” Benson noted. “Many buyers are unaware that the Federal Emergency Management Agency (FEMA) does not cover debris removal, road rebuilding and disaster relief in private HOA communities, because the funds are earmarked for public aid.”

• There is no comparison between the amounts of funds held in association reserve accounts and the percentage of the association’s annual income.

• Data in the most recent reserve studies are not evaluated in the questionnaires.

• The percentage funded in the reserve study is not considered.

• The questionnaires do not ask for information on the individual unit’s percentage of ownership. This percentage represents the borrower’s liability for their portion of the association’s financial risks.

• There is no requirement of a certification from the HOA of the monthly/quarterly/annual dues.

• Disclosure of any unpaid assessments and/or delinquent fees owed is not addressed in the questionnaire.

Sometimes these unpaid assessments—which can run into the thousands of dollars—are not disclosed until the association prepares a “paid-assessment letter”—or “estoppel certificate”—immediately prior to closing, Benson warned.

• Questions listed under the “Newly Converted or Rehabilitated Project Info” heading apply to all projects—not just newly converted or rehabilitated projects.

Also, the title—“Condominium Project Questionnaire”—seems out of sync, according to Benson. “If forms are to be used for both types of associations, the title of the form should be “Condominium and HOA Project Questionnaire.”

For electronic copies of the Uniform Mortgage Data Program® questionnaires, follow this link:

Before jumping blindly into ownership of a condo or HOA, Benson urged home shoppers to obtain a “Private Association Rating”—or PARScore® on the association. “PARScore®, available through Association Evaluation, is designed to turn guesswork into facts that empowers purchasers in their decision-making process.”

Through a proprietary algorithm, PARScore® provides a standardized rating between 400 and 900. “Financially healthy and well-run associations receive higher ratings while risky associations plagued with low bank balances, non-paying owners, special assessments and lawsuits receive lower ratings,” Benson said.

For more information on the PARScore®, visit:, or call 844-PAR-SCORE (844-727-7267).

For more housing news, visit Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”


Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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