WHY IS IT SO HARD TO BUY A CONDO?

Many of our out of state clients are wanting to purchase condos. Condos are becoming one of the most difficult real estate purchases in our market. This is because of the high foreclosure rate and the vacancies. Many condo owners are not paying their HOA dues, placing the Homeowner's associations in jeopardy. See the question below.
Question: My perfect client is putting 50 percent down on a condo. The lender says they need to approve the entire complex. What's up with that?

Answer: Because of the number of condominium foreclosures across the country, most conventional lenders are requesting a complete legal review of the complex. In the ancient days or last year, the lender would request a simple condo certification form to be filled out and signed by any representative of the home owners association.

Now Fannie Mae and Freddie Mac want a full-blown packet with all of the recorded HOA legal documents, as well as their budgets to be scrutinized either by an underwriter or a condo review specialist.

What are they looking for? These are the highlights:

1. Delinquent HOA dues. If the complex has over 15% of the condo owners past due, it may not qualify (Yikes! This one really hurts)

2. The budget must be reflect money in reserves for unexpected repairs

3. Any lawsuits that pertain to the building or structure

Believe it or not, Fannie Mae does not have a guideline of primary residence to investor. But that is the holy grail of most banks. If the mix is more investor than primary, it could be a deal breaker.

FHA and VA are a little simpler, at least for today. As long as the condominium complex is listed on the HUD website as approved, you are good to go. Well, almost. The lender will still need to validate a 51% plus owner occupancy.

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Mary & Mike Drefs
Keller Wms Realty Professional Partners
623-694-0354 marydrefs@cox.net
Agent of the Year 2001,2002,2003 & 2004
Top Team 2005, 2006, 2007 & 2008 !!!