NON WARRANTABLE FINANCING FOR CONDOMINIUM AND CO-‐OP: Does it exist? Presented by: Orest Tomaselli, CEO Na7onal Condo Advisors, LLC
Na=onal Condo Advisors, LLC: The na7on’s premier condominium project approval service www.na7onalcondoadvisors.com Ph. 888-‐726-‐6361
Overview • Deﬁni7on of non-‐warrantable • Typical compliance issues • Individual lender approvals • Loan expecta7ons • Lender products • What do lenders want? • Planning • Consul7ng by advisory team
Non-‐Warrantable: Deﬁni=on? • Fannie Mae project approval • FHA project approval • VA project approval Non–warrantable condominiums and coopera=ves are those proper=es which do not and cannot meet the standards set forth by Fannie Mae, FHA and the VA for end loan lending to occur.
Typical Compliance Issues: The Most Common • Pre-‐sale • 10% budget reserve • Reserve funding • Excessive sponsor unit ownership • Single investor ownership above 10% • Li7ga7on and construc7on deﬁciency
Typical Compliance Issues: • Excessive rental percentage • By-‐law leasing restric7ons • Aﬀordable housing component • Fannie Mae by-‐law compliance (Form 1054) • FHA foreclosure/bankruptcy moratorium “One year aging required from the date of bankruptcy discharge, termina7on of receivership, issuance of foreclosure judgment or execu7on of deed-‐in-‐lieu”. (ML 2011-‐22, page 23)
Loan Expecta=ons • Interest rate increases • Available loan types • Lower loan to value/Increased down payment
Lender Products • 25% Pre-‐sale for new construc7on • 35% Pre-‐sale for all property types • Jumbo alloca7ons • Non-‐gut rehab lending: excluding rent regulated units • Excessive commercial
What Do Lenders Want? • Bulletproof compliance • Excessive reserves • Accurate appraisals
Planning • Work with the end in mind: agency approval • Gegng agency approvals by compliance • Waivers aher the ini7al sales period • Alterna7ve planning • Professional consulta7on: why the lender consult might not work for your development
Thank you! Ques=ons/Comments? *Na7onal Condo Advisors, LLC is not a law ﬁrm. None of the guidance or advice contained within should be considered or construed as legal advice from either NCA or any of its employees. We recommend you consult with your ajorney regarding the informa7on provided within.