HOA Legi-Slate

With the recent rise in foreclosures, the mortgage industry is tightening up its guidelines and lenders appear to be scrutinizing the answers on condominium questionnaires more closely. For example, we have seen lenders reject a loan claiming the condominium project was ineligible under FNMA guidelines because owners could hold title to more than one unit under a single mortgage. The basis for this rejection was a provision in the association’s declaration that allowed owners to combine two units. Next time you complete a condominium questionnaire asking whether two or more units can be owned by one owner as evidenced by one mortgage, you might want to consider how you answer it.  What relevance do you think the authority to combine units in a declaration has on that question?  It will likely be totally dependent on other provisions in the delcaration so you may need to consult with counsel before you answer completely one way or another.

This is interesting. Are there any figures available on loans refused because the association reserves are inadequatley funded? This argument arises whenever a fee increase or special assessment is proposed to fund the reserves. Realtors always tell owners that their value will go down if fees increase. On the other hand lenders will not loan on a project where the reserves are not adequatley funded thus stating there is no value. This would be interesting to find out.

Mortgage lenders have a lot of nerve making it more difficult for a buyer to purchase a home in a common-interest community! They are trying to punish us for their past failures. They gave loans to anyone with a breath, without regard to their financial qualifications or their ability to pay HOA dues. They put thieves into our communities, and now they try to hold it against us when they don't pay. You gotta love it.