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, and
do not require the payment of assessments.
Fannie Mae classifies PUD projects as either
Type E—established PUD projects in which the developer has turned over voting control of the HOA to the unit purchasers.
Type F—new PUD projects in which the developer has not turned over voting control of the HOA to the unit purchasers.
PUD projects are not eligible for review using the PERS process, unless they contain single-wide manufactured housing, which does require a PERS submission.
Lenders must determine that the subject unit meets the following requirements.
For Units in PUD Projects
|The appraisal of the unit meets all appraisal requirements in Chapter B4-1, Appraisal Requirements.|
|The individual unit securing the mortgage must be substantially complete. Any unfinished items must be in compliance with Fannie Mae’s policy for Postponed Improvements (see B4-1.2-03, Requirements for Postponed Improvements).|
|The unit securing the mortgage satisfies all Fannie Mae's insurance requirements in Subpart B7, Insurance, including all provisions applicable to PUD projects.|
|The PUD project must be in compliance with Fannie Mae’s policy for priority liens (see B4-2.1-02, Ineligible Projects).|
Note: Any unit located in a condo or co-op project within a larger PUD project or master association must meet the applicable requirements for condo or co-op projects.
The table below provides references to the Announcements that have been issued that are related to this topic.