CondoÂ orÂ PUDÂ projectsÂ involvingÂ pendingÂ litigation may be considered eligible providing all of the following requirementsÂ areÂ met:
Â· CondoÂ projectÂ mustÂ have aÂ formalÂ Home OwnerÂ Association.Â Small 2Â4Â condoÂ projects withoutÂ aÂ formalÂ HOAÂ withÂ knownÂ pending litigation areÂ notÂ eligible forÂ financing.
Â· ProjectÂ may notÂ be located inÂ FloridaÂ regardless if subjectâ€™sÂ location isÂ anÂ eligible county
Â· ProjectÂ mustÂ meetÂ all otherÂ FNMAÂ projectÂ eligibility criteria
Â· Full appraisalÂ reportÂ isÂ required.Â
o Reduced appraisalsÂ or PIW isÂ notÂ permitted regardlessÂ of DUÂ findings.Â
o AppraiserÂ may notÂ indicate thatÂ marketability issueÂ are presentÂ as aÂ resultÂ of the litigation issues
Â· PriorÂ toÂ UW loanÂ approvalÂ being issued,Â acceptable documentation mustÂ be provided andÂ reviewed by UW priorÂ toÂ docs toÂ determine:Â
o Pending litigation isÂ limited only to minor mattersÂ and:Â
o Litigation has noÂ impact onÂ the safety,Â structuralÂ soundness, habitability,Â or functionalÂ use of the project.Â
o TheÂ followingÂ areÂ defined toÂ be minorÂ matters:Â
ÃŸ nonÂmonetary litigationÂ involvingÂ neighborÂ disputesÂ orÂ rightsÂ of quietÂ enjoymentÂ orÂ
ÃŸ litigation forÂ whichÂ the claimed amountÂ isÂ known,Â the insurance carrierÂ hasÂ agreed toÂ provide the defense,Â and theÂ amountÂ isÂ covered by the associationâ€™sÂ insurance;Â orÂ
ÃŸ TheÂ homeownersâ€™Â associationÂ isÂ named as the plaintiff inÂ aÂ foreclosureÂ action,Â orÂ as aÂ plaintiff inÂ anÂ action forÂ pastÂ due homeownersâ€™Â associationÂ dues.
Â· Operationâ€™sÂ ManagerÂ 2Â nd signature isÂ required inÂ additionÂ toÂ UW approval
I would suggest going with a direct lender (everyone will tell you they are a direct lender)... they have to be a Mortgage Banker and have underwriting and processin in house and write the loans under their name. you need to verify this.
If is a large law suit, it will probably be difficult.. if is a minor matter then it would probably be fine.
Ron Escobar, MBA
Broker & General Contractor
RPM | Los Angeles
Cell: (310) 995-0975