non warrantable financing
DESCRIPTION
Details about the what, why and hows of non-warrantable financing for condominiums. Learn about products and services from various lenders and what's right for your development.TRANSCRIPT
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
• 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.
Non-‐Warrantable: Defini=on?
• Pre-‐sale
• 10% budget reserve
• Reserve funding
• Excessive sponsor unit ownership
• Single investor ownership above 10%
• Li7ga7on and construc7on deficiency
Typical Compliance Issues: The Most Common
• 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)
Typical Compliance Issues:
• Condominium alterna7ves
• Coopera7ve alterna7ves • Sponsor financing op7ons
Individual Lender Approval
• Interest rate increases • Available loan types • Lower loan to value/Increased down payment
Loan Expecta=ons
• 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
Lender Products
• Bulletproof compliance
• Excessive reserves • Accurate appraisals
What Do Lenders Want?
• 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
Planning
Thank you!
*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.
Ques=ons/Comments?