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Community Living: FNMA refers to lender documents

FNMA refers to lender documents

Q: Our homeowners association covenants and many others reference "FNMA Lending Guide, Chapter Three, Part 5, Insurance Requirements" regarding liability insurance and fidelity bond coverage. Where can I get a copy? Is this still a good reference?

A: When a bank or mortgage lender takes a mortgage, they give money to the seller. If that was the end of the story, our banks and mortgage lenders would run out of money to lend. To help solve this problem, the government and private groups will buy mortgages (secondary market) from the banks and lenders and give the bank or mortgage company money for them to lend again. This secondary market includes Freddie Mac, Fannie Mae (FNMA), and other secondary lenders. Their purpose was established to buy mortgages to re-enter money into the market. To carry this further, you need to go back and study the government's involvement in the banking industry. I will start with the "big depression" in 1933 but there were other laws from the beginning of our country.

There have been many other government acts before and after this act to help control the lenders. The Glass-Steagall Banking Act (GSBA) became law in 1933. That act regulated the banks to only allow certain lending and banking operations. At that time we had thrift banks, commercial banks, credit unions (1934), saving banks, savings and loan associations, and many other named financial institutions. In 1999 the government deregulated banks by repealing the GSBA, and many of the banks were allowed to conduct other businesses beyond banking such as insurance sales and stock transactions to name a few. The changes to the banking industry have resulted in several bank bankruptcies and failures. Your documents refer to FNMA mortgage application package because most lenders use the FNMA forms. It is not the law to use FNMA mortgage guidelines, just a policy, but your documents do require it as a protection to future buyers and make obtaining a mortgage simpler. This means that what was the banking industry a decade ago is not the same as we see today. But the framework as mentioned in your documents is still there. The requirement is nothing more than certain mortgage lender requirements, the loan documents that you can get at any bank.

Two lots, two fees and two votes

Q: I have a question regarding the number of votes a household is entitled to. We are a small community, 42 homes. The question is, if one homeowner now owns two homes, do they get two votes or just one?

A: You would need to read your document to see how the voting is counted. Normally it is per lot, or in the case of condominiums, per unit. There are some exceptions, but they are rare. You have 42 homes (lots), and my guess is that your documents say each lot has one vote. Therefore, if an owner owns two lots, he would be allowed two votes. He must pay a fee for each lot, and that would give him the rights for both lots.


Community Living: FNMA refers to lender documents 12/29/12 [Last modified: Saturday, December 29, 2012 3:31am]
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