Cohousing-L Mailing List: Re: New Standards for Fannie Mae and Freddie Mac Backed Mortgages

[Sharon Villines (sharon]

> On Sep 3, 2023, at 1:01 PM, David Heimann <heimann [at] theworld.com> wrote:
> 
>>   ? Commercial space may not be more than 35% of the total above and below 
>> grade square footage is used as commercial or non-residential space, the 
>> project is ineligible.
> 
> This sentence is hard to understand.  Can you explain it further?

It’s a very bad sentence for sure. I checked the CAI original to be sure I 
hadn’t missed some words. And quickly looked a the Fannie Mae site to see if 
the FAQ had an explanation. But it would take longer than I have to find the 
right reference.

But from what I know about legal complexities with condos they are used by 
developers to disguise the true nature of the project. State and federal laws 
get very complicated to prevent this from happening. In this instance, it seems 
to be preventing taking advantage of tax and insurance programs intended for 
residential property by concealing what is really a commercial business as part 
of a condo. 

But in fact, many perfectly honest condos do host a commercial project in order 
to defray costs.

So what Fannie and Freddie seem to be saying that if 35% of the SF is used for 
commercial or non-residential space, it is ineligible for a Fannie or Freddie 
insured mortgage. If you have a deli on the corner or a public gym, it has to 
be less than 35% of the total square footage including both above and 
below-grade spaces.

Sharon
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Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org