3/8/24 – A day late, but some really important info on condos This email is going to be a long one, but it is important! Things have been picking up nicely, and I want to thank all of you for your hard work to help make this market a little busier! As frustrating as this market is, we have learned to become more understanding and patient with things as we move through the battles of condos, insurance, and insurance on condos. We learn new things daily and must communicate what we know or hear about a complex to get through this challenging time together! I heard about a canceled escrow in American Beauty Gardens this week, and we are working on one in that complex. We should have approval by the time I write this on Tuesday. We have had a lot of wins, and we do our best to keep communicating with all of you and letting you know when we see an issue. We let you know when the main lender dropped out of Mariposa, and we thought for a minute that we were dead in West Creek and quickly found a couple of new sources. The unknown scares us as we get burned by what we don’t know. I had a lender call me about Encino Oaks yesterday morning, and we spoke briefly about the issues there. I gave him the lenders I thought would lend in that complex and told him to let me know if it worked. I can only assume it will unless there are more significant problems. Lesson time, and this is where it gets long! A condo/ townhouse may be deemed non-warrantable for the following reasons: There are several reasons why a condo might be deemed non-warrantable: Investor concentration: If investors rather than primary residents own a large percentage of units within the condominium project, it may be considered non-warrantable. One entity owns more than 10% of the units. Delinquent HOA dues: If a significant number of unit owners are behind on their homeowners’ association (HOA) dues, the condo can become non-warrantable. Commercial space: Condominium projects with a substantial portion of commercial space may be considered non-warrantable. Litigation: Ongoing litigation involving the condominium project can make it non-warrantable. Not all litigation causes a project to be non-warrantable. Insurance coverage: Insufficient or inadequate coverage for the condominium project might lead to non-warrantable status. We know this all too well, and this is the big one. Reserve funds: Inadequate reserve funds for maintenance and repairs can make a condo non-warrantable. Deferred Maintenance: Deferred maintenance, health and safety issues, or repairs can make a condo non-warrantable. Any or, in some cases, all of the above can push property to Fannie Mae’s naughty list, which means we may have to get a loan from a non-warrantable lender. It doesn’t have to hit Fannie’s list to make a complex, non-warrantable! Individuals seeking to purchase or refinance non-warrantable condos may need to explore alternative financing options, such as portfolio loans offered by certain lenders (Augusta Financial) willing to take on higher-risk properties or considering specialized lenders catering to non-warrantable condominium financing. When listing a condo that might be non-warrantable, Realtors should be aware of several key factors to market the property and manage client expectations effectively. Here’s what they should know: Understand the financing implications: Realtors should educate themselves about the financing challenges associated with non-warrantable condos, including which lenders (Augusta Financial) specialize in non-warrantable condo financing and the potential impact of higher interest rates and down payment requirements on buyers. Gather information about the Condo Association: Realtors should obtain as much information as possible about the condominium association, including its financial health, any ongoing litigation, the percentage of units owned by investors, and the status of HOA dues. This information can help buyers and their lenders assess the risk associated with the property. Disclose non-warrantable status upfront: Realtors must disclose the condo’s non-warrantable status upfront to potential buyers. Being transparent about the financing challenges associated with the property can help manage expectations and avoid surprises later in the transaction process. Work with experienced lenders: Realtors should establish relationships with lenders (Augusta Financial) who have experience financing non-warrantable condos. These lenders can provide valuable insights and guidance to Realtors and their clients throughout the transaction process. Understand that these properties are undervalued: when the property becomes warrantable, these properties will likely go up in value because the rates will be better, and people buy based on payment. Educate clients about alternatives: In addition to traditional mortgage financing, Realtors should educate their clients about alternative financing options for non-warrantable condos, such as portfolio or seller financing. Exploring these alternatives can broaden the pool of potential buyers for the property. Set realistic expectations: Finally, Realtors should set realistic expectations with their clients about the time it may take to sell a non-warrantable condo and the potential impact on the sale price. Being upfront about the challenges associated with non-warrantable status can help avoid frustration and disappointment. By understanding the financing implications, gathering relevant information, disclosing non-warrantable status upfront, highlighting selling points, working with experienced lenders, educating clients about alternatives, and setting realistic expectations, Realtors can effectively list and market condos that might be non-warrantable. The classification of a condominium as non-warrantable can have several effects on both buyers and sellers, as well as on the overall condominium community. Here are some of the key effects: Limited financing options: Non-warrantable condos typically have fewer options than warrantable ones. The options can come with higher interest rates or stricter terms. Higher interest rates and down payment requirements: Lenders may perceive non-warrantable condos as higher-risk investments, leading to higher interest rates and more significant down payment requirements for buyers. Lower resale value: Limited financing options and higher risk can impact resale value. However, values will likely increase when the complex becomes warrantable! Challenges for sellers: Sellers of non-warrantable condos may need help finding qualified buyers due to the limited financing options and potential stigma associated with non-warrantable status. Impact on condominium community: A condo’s non-warrantable status can affect the entire condominium community. It may make it more difficult for existing residents to refinance their mortgages or sell their units if potential buyers need help to secure financing. Additionally, the perceived risk associated with non-warrantable condos can make it harder for the condominium association to secure loans for necessary repairs or improvements to the property. Overall, a condominium’s classification as non-warrantable can have significant implications for individual buyers, sellers, and the condominium community. It’s essential for individuals considering purchasing or selling a non-warrantable condo to understand these effects and work with experienced real estate professionals who can navigate the challenges associated with non-warrantable properties. We finally got to my first sign-off before we go to rates and Condos with issues! I am available all weekend if you need anything. Let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text, text (661-714-6258) or email me at Mike@AugustaFinancial.com. But wait, there’s more! Condo / Townhome – issues we know of now. Properties can be financed with 10% down and are considered NON-WARRANTABLE: American Beauty Condos – The brown ones – Insurance – 50 Mil in coverage for 748 units is not nearly enough! American Beauty Village West: Reserves Bouquet Canyon Village – Insurance – On Fannie’s list! Bridgewater, Emeryville - On Fannie’s list! Brookside Walk – Insurance – Cabrini Villas, Burbank - On Fannie’s list! Canyon Oaks – Insurance On Fannie’s list! Casa Marabella – 13951 Sherman Way, Van Nuys -On Fannie’s list! Cornerstone – Insurance -On Fannie’s list! Encino Oaks – 5460 White Oak Ave – On Fannie’s list! Liberty Canyon HOA – 27409 Country Glen Road, Agoura Hills, CA- On Fannie’s list! Mariposa: Insurance On Fannie’s list! Penn Court HOA – 4201 Pennsylvania Ave La Crescenta On Fannie’s list! Rainbow Sierra Terrace – Underinsured and voting on Insurance in March! Scenic Hills – Insurance – On Fannie’s list! Shadow Ridge – Oak Park – Insurance -On Fannie’s list! Sherman Way Condos – 17900 Sherman Way Reseda – On Fannie’s list! Sierra Glen Condos – Insurance – On Fannie’s list! The District Community Association – 19533 Cardigan Dr, Northridge – On Fannie’s list! The Met at Warner Center, Woodland Hills - On Fannie’s list! Treana – Stevenson Ranch: On Fannie’s list! Valle Di Oro – On Fannie’s list! Walnut Gardens II – 7320 Lennox Ave Van Nuys CA – On Fannie’s list! Warner Center Condos – 5515 Canoga Ave, Woodland Hills, CA On Fannie’s list! West Creek Condos and Townhomes: Insurance On Fannie’s List! Please let me know if you hear anything new on condos or townhouses. Interest rates had a solid week, and let’s continue this run for March! Rates are at their best levels since February 2nd, 2024! Yes, I put the 2024 for you sarcastic comedians. 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge We do loans in all states, so call me with anything you need. Government Loans (FHA / VA) are in the high 5’s and low 6’s Conventional Loans up to $765,550.00 are in the low to mid 6’s High Balance Loans $765,550.00-$ 1,148,325.00 are in the mid to high 6’s Jumbo loans above $1,148,325 are in 6’s Bank statement loans - They are available with 10% down again! 6’s to 9’s depending on down and credit score. No income qualifier – 40% down with reserves! In the 8’s! 0 down loans are in the high 7’s – 660 credit score min right now, up to $793,000.00. Private Money lenders - Hard Money Loans – 35% down! No Ratio Loans 30% down Debt Service Coverage loans with as little as 25% down Bridge Loans - typically 7.49% with limited fees – and they get you where you need to go! 0 down California Dream for all Equity Share – Postponed until April 2024??? Ya better hurry and get started! 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates! Interest rates are subject to change without notice! The above are LA County Loan Limits. I am available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is working again at 661-291-2222. When you text, text (661-714-6258) or email me at Mike@AugustaFinancial.com. Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow! Mike Meena President | Loan Officer Click to Call or Text: (661) 714-6258 This entry has 0 replies Comments are closed.
