Condominium Conversion Requests

Borrowers must seek approval before making any material change in use to any portion of the property – for example, planning to change residential space to condominium, cooperative, commercial or other proposed non-residential use.

The table below lists the key points to consider in reviewing a request for a condominium conversion. If a multifamily mortgage loan is owned or securitized by Fannie Mae, the property backing the mortgage loan may never be converted to a condominium, sales initiated, or units sold unless allowed by the loan documents.

Guide Reference	Multifamily Selling and Servicing Guide Part V, Servicing and Asset Management, Chapter 4, Section 414
Delegation Criteria	Generally, you may approve a condominium conversion plan if you answer “No” to all of the questions in Part VIII of the Multifamily Asset Management Delegated Transaction Form (Form 4636). Fannie Mae approval is required if: You answer “Yes” to even one question on Form 4636 The property was financed through a credit facility or bulk delivery.
What to Submit	Multifamily Asset Management Delegated Transaction Form (Form 4636), Parts I, II, III, and VIII. If You Answer “No” to All Questions Complete the relevant parts of Form 4636 and keep a signed copy in the servicing file for the mortgage loan to document your consideration of the conversion. If You Answer “Yes” to Even One Question Complete the relevant parts of Form 4636, take any actions specified for each question with a “Yes” answer (see example below) and submit the following to Fannie Mae: A signed copy of Form 4636 The documents requested on the form for each question with a “Yes” answer A full explanation of the proposed conversion including a description of the portion of the property that will be affected by the conversion Your recommendation Example: You answer “Yes” to the question: “In preparation for the condominium conversion, will the borrower affirmatively decrease occupancy (e.g., suspend leasing of vacant units)?” In this case, you would notify Fannie Mae immediately.
How to Submit	Generally: [email protected]. Structured Facilities* (Credit Facilities and Bulk Deliveries): [email protected] *Seniors Housing:** [email protected] Hard Copy (if required by Fannie Mae) Fannie Mae Credit Services/Drawer AM Mailstop 8H-607 3900 Wisconsin Ave. NW Washington, DC 20016 *Please contact us at these e-mail addresses for requirements specific to these financing types.
Fees	$10,000 collectible from the borrower when it submits a formal request for approval of the conversion. The fee is shared equally by you, as the servicer, and Fannie Mae. You also may ask the borrower to reimburse you for any reasonable out-of-pocket costs connected with the review of a proposed conversion. Wire any fees due to Fannie Mae to the following account no later than 10 business days after you receive them. Include the type of fee or deposit, property name and Fannie Mae loan number. ABA Number: 021 039 500 Telegraphic Abbreviation: FNMA/NYC Account Number: 169220242 Note: Type of fee (Assumption or Partial Release), the Fannie Mae Loan Number and the Property Name. Attn: Trans code 513 - GL 747669921
Use of Funds	Not applicable
Resolution/Follow-up	For non-delegated requests, Fannie Mae reviews the documents and advises you of any follow-up actions that need to be taken. For delegated requests, follow the instructions in the Guide for executing any documents required with this request. If You Have Limited Power of Attorney If you have delegated authority and a limited power of attorney to execute documents related to a condominium conversion, an officer of your company may sign any related documents as attorney-in-fact for Fannie Mae. The signature block must be signed “[Name of Servicer], as Attorney-in-Fact for Fannie Mae.” If You Do Not Have Limited Power of Attorney If you do not have limited power of attorney, send the documents to Fannie Mae for review and execution. Whether it is you or Fannie Mae that approves the conversion, follow the instructions in the Guide for obtaining the required documentation. You need to retain a copy of the documentation in your servicing file and send the originals of the borrower-executed Condominium Subordination Modification (Form 4067), title insurance endorsement, and any other related documentation to Drawer AM at the physical address listed above. If you modify the language in Form 4067 or any other Fannie Mae form or document related to the request, send the amended document to Fannie Mae for review. The amended document should be blacklined against the original version of the form or document.
Unauthorized Conversion	If you become aware that the borrower has granted a condominium conversion without your prior approval or that of Fannie Mae, you must promptly complete Form 4636 and follow the same process you would if the conversion had not been granted. Immediately send the borrower a Reservation of Rights Letter (Form 4804). Send a copy of Forms 4636 and 4804 to the applicable Asset Management mailbox. Fannie Mae will decide whether to approve the conversion or declare the mortgage loan in default.

Always consult the loan documents, transaction documents, your servicing agreement, the Multifamily Guide and the relevant forms for complete instructions.