With the purchase market continually jamming along, more and more clients are now looking at condos as a way to "get into the homeowner market."
Naturally, many realtors have concerns with condos, as do many banks and lenders. In fact, the most drastic changes in lending for the past 5 years has been the tightening of condo lending. From the equity usage to owner occupancy, to the dreaded litigation.
So, how do we get the client approved and into a solid purchase, particularly if there is litigation?
I recently closed 5 deals in a complex with litigation in San Francisco. Incredibly, there were 3 different litigations on this complex, so here is what I can share -
1) know and understand what the litigation entails. For example, this complex hadÂ a board member make investments for the HOA that eventually went belly up, and the association was the petitioner.
2) Document all the details, so if there is some conclusion coming soon, like a court date or mediation ruling, that is highly relevant to lenders.
3) Ask your loan officer to actually research this with their lenders (mortgage brokers are especially useful here since they have more lenders to work with). I found a lender that was accepting multiple litigations, but ONLY after I did my homework and completed steps 1 and 2 above.
4) Coach your client to be open to investigating the facts, and see if thinking longer term and big picture style is useful.
In EVERY case of the closings, the client had attempted financing elsewhere (and been declined), so both the realtors and clients were naturally hesitant and cautious. My role was one of research, and to be fact based so all parties were clear about their chances.
"Chance favors the prepared" -