4/18/2024 – Difference In Payment on Non-Warrantable Condos

If you have a non-warrantable condo listed and it is not selling, there is a reason! The price is too high!!! Let’s get this straight so we can all understand what a non-warrantable condo is and what loan products you can use.

Non-warrantability does not mean that you can take out a non-QM loan. Some non-QM lenders will do non-warrantable condos, but it depends on the issue with the condo before they say yes. The minimum down payment on a non-warrantable condo is 10%, and there is no PMI!

We have one conventional lender lending in at least two non-warrantable complexes! One has 19% HOA delinquencies, and the other has a lawsuit that has not been turned over to the insurance company. This lender is a good option, and we can get clients loans with as little as 5% down!

Fannies list means you are not getting a conventional, FHA, or VA loan! You must go the non-warrantable route with no exceptions. Most of the complexes on this list are working towards getting off it, but some may be on here for a long time, especially those with insurance issues. Fannie started this list because of the collapse of the Seaside Condo complex in Florida, and they will not lend in underinsured complexes or in disrepair!

Rate and payment differences between warrantable and non-warrantable: 

This is why I say some of these condos are overpriced!

$600K non-warrantable Condo 10% down = $4540.61 + Taxes, Insurance and HOA.

$600K warrantable condo 10% down = $3683.75 +$112 PMI = $3795.75 + Taxes, Insurance and HOA.

$600K non-warrantable Condo 15% down = $3966.73 + Taxes, Insurance and HOA.

$600K warrantable condo 15% down = $3479.10 + $63 PMI = $3542.10 + Taxes, Insurance and HOA.

$600K non-warrantable Condo 20% down = $3397.41 + Taxes, Insurance and HOA.

$600K warrantable condo 20% down = $3274.45 + Taxes, Insurance and HOA.

The payment difference is small at 20% down or more, but it is brutal at 10% down. Most condo buyers put down less than 10%, so some of these properties stay on the market longer than they should! If you are buying a non-warrantable condo with 10% down then you would need a 15% discount on the property to keep the payment at the same as a conventional loan.

Update on Condos 3rd week of April – 

From the HOA at Creekside: We don’t know what this means, but it sounds like they paid the insurance. This could mean that they need to put more towards reserves. I also need to find out what part of Creekside they are talking about!

Insurance special assessment: The Association was forced to implement a special assessment to cover the 2024‐2025 insurance renewal premium. Last year, the Association paid $18,103 for the renewal policy. This year, the Association was served with a notice of nonrenewal and was forced to go out to other agents and carriers to find & secure coverage. The only coverage we could secure came at a premium of $148,963.70. This outrageous increase was unanticipated, unforeseen, and not budgeted for. Unfortunately, this has led to borrowing funds from the Reserve account to avoid any lapse in coverage or insufficient coverage for the community. Please note that experts in the field, agents, and attorneys alike do not anticipate the insurance costs will lessen soon. This, unfortunately, may lead to continued budget increases to keep the Association adequately insured and funded. The board and management continue to work closely with insurance agents to scan the market for other, less expensive options, and they have not given up on the search. We thank you for your understanding and support during this time.

The first of two signoffs is below:

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:

1. American Beauty Condos – The brown ones – Insurance – 50 Mil in coverage for 748 units is not nearly enough!
2. American Beauty Gardens: 19% delinquency on special assessments due. 19% are 60 days or more late! We can do with 5% down, but others can’t!
3. American Beauty Village West: Reserves
4. Bouquet Canyon Village – Insurance – On Fannie’s list!
5. Bridgewater, Emeryville - On Fannie’s list!
6. Brookside Walk – Insurance –
7. Cabrini Villas, Burbank - On Fannie’s list!
8. Canyon Oaks – Insurance On Fannie’s list!
9. Casa Marabella – 13951 Sherman Way, Van Nuys -On Fannie’s list!  
10. Cornerstone – Insurance -On Fannie’s list!
11. Encino Oaks – 5460 White Oak Ave – On Fannie’s list!
12. Liberty Canyon HOA – 27409 Country Glen Road, Agoura Hills, CA- On Fannie’s list!
13. Madison at Towne Center  – Litigation – We can do with 5% down, but others can’t!
14. Mariposa: Insurance On Fannie’s list!
15. Penn Court HOA – 4201 Pennsylvania Ave La Crescenta On Fannie’s list!
16. Princessa Estates – has $8200 in Reserves, and they are voting on an assessment in May!
17. Rainbow Sierra Terrace – Underinsured and voting on Insurance in March!
18. Scenic Hills – Insurance – On Fannie’s list!
19. Shadow Ridge – Oak Park – Insurance -On Fannie’s list!
20. Sherman Way Condos – 17900 Sherman Way Reseda – On Fannie’s list!
21. Sierra Glen Condos – Insurance – On Fannie’s list!
22. The District Community Association – 19533 Cardigan Dr, Northridge – On Fannie’s list!
23. Treana – Stevenson Ranch:  On Fannie’s list!
24. Valle Di Oro –  On Fannie’s list!
25. Vista Del Canon – Insurance is too low, UGH!
26. Walnut Gardens II – 7320 Lennox Ave Van Nuys CA – On Fannie’s list!
27. Warner Center Condos – 5515 Canoga Ave, Woodland Hills, CA –  On Fannie’s list!
28. West Creek Condos and Townhomes: Insurance On Fannie’s List!

Please let me know if you hear anything new on condos or townhouses.

Bad Tuesday, good Wednesday, bad Thursday! Interest rates are on the higher side and we hope to get better soon!

• 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/ USDA) are in the high 5’s and low 6’s
• Conventional Loans up to $766,550.00 are in the high 6’s and low 7’s
• High Balance Loans $766,550.01 – $ 1,149,825.00 are in 7’s
• Jumbo loans above $1,148,325 are in 7’s
• Bank statement loans - They are available with 10% down again! 7’s to 9’s depending on down and credit score.
• Profit and Loss Statement loans- You don’t need bank statements, just a profit and loss statement!
• 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
• DSCR – Debt Service Coverage loans with as little as 15% down
• Bridge Loans - typically 7.99% with limited fees – and they get you where you need to go!
• 0 down California Dream for all Equity Share – Registration April 3 to April 29, 2024
• 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 still 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.

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!