Frontline Florida Realty Blog

Non Warrantable Condos

October 1st, 2009 6:46 PM by Alan Martin

Some of you have asked me about

Non Warrantable Condos - these are condominiums that are not eligible to be sold to Fannie Mae or Freddie Mac because they DO NOT fit into one of the following three classes:

CLASS I

1. Developers control of the homeowners association has been turned over to the condo owners
2. Project is not subject to additional phasing or add-ons which have not yet been completed
3. All common elements and amenities must be fully installed, completed and in operation
4. 70% of all units in the entire development must have been sold and or legally obligated to close
5. 70% of all units in the entire development must have been sold to owner occupants

CLASS II

1. Recent or current condominium conversions (from apartments)
2. Homeowners association has been controlled by the unit owners (other than the developer) for less than two years
3. Project is not subject to phasing or add-ons which have not yet been completed
4. All common elements and amenities are fully installed, completed and in operation
5. 70% of the units in the entire development must have been sold and/or legally obligated to close
6. 70% of the units in the entire development must have been sold to owner occupants
7. No more than 15% of the current unit owners are more than one month delinquent in payment of homeowners dues or assessments

CLASS III

1. Homeowners Association has been controlled by unit owners (other than developer) for at least one year
2. Project is not subject to phasing or add-ons
3. All common amenities are fully installed, completed, and in operation
4. 90% of the units have been sold (owner-occupancy of at least 60%)

A CONDO QUESTIONNAIRE MUST BE COMPLETED BY THE MANAGEMENT TO DETERMINE PROJECT ELIGIBILITY

For those who are considering purchasing Non-Warrantable condos, they should expect to pay higher interest rates on their mortgage loans. Because FNMA would not purchase mortgages secured by non-warrantable condominiums, many banks consider these condos to be more risky, and thus increase the interest rate accordingly.

Depending on the loan program you select, be prepared to have a down payment on the home. Most lenders will only offer low Loan-to-Value financing on non-warrantable condos.

We do not know of anyone offering loans onNon Warrantable Condos at this time.  So Cash only buyers are able to take advantage of the outstanding deal that we can help them with

Posted in:General
Posted by Alan Martin on October 1st, 2009 6:46 PM

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