Financing in San Francisco>Question Details

David, Home Seller in San Francisco, CA

Where can I find lenders willing to consider loaning on a condo where one person owns most of the units in the building?

Asked by David, San Francisco, CA Sun Oct 14, 2012

I have owned a four-unit SF building for many years, and recently completed condo conversion, so now I own the four condominium units. I live in one, two are rented, one is vacant and I want to put it on the market. But I need to refinance my loan on the building into a loan on my condo. I have perfect credit and the LTV would be low (60%). But lenders are scared off because even after I sell one, I will still own three of the four units (and can't sell the other two for at least a year.) Nobody seems willing to pursue the Fannie Mae exemption from the condo ownership rule, even though (as I understand it) that would make the units warrantable. Where can I turn? If I can't refinance, I can't sell the empty unit, and even if I could, buyers will have the same problem getting financing. I'm working with a good broker but they're throwing their hands in the air. Help!

Help the community by answering this question:


You can do this in a couple of ways:
1. Direct Fannie Mae lender who will apply for the Fannie Mae CPM exception. This may not be an option for you, as 2 of your 4 units will be investments even after if sell the 4th unit to an owner occupant, and the exception allows only 1 investment unit in the building.
2. Broker who can refinance your current loan with a portfolio lender into loans on 2-3 of the units. With high ownership by one entity, you will probably be limited to ARMs, but it's possible to do.
3. Sell the empty unit. The new owner would be able to get conforming or specialty financing.
4. Once you've sold 2 of the 4 units to owner occupants (seller financing or portfolio financing for buyers), you'll be able to pursue the Fannie Mae exception for the other 2 units.
5. Hard Money is a very expensive temporary solution (points upfront + very high interest). I think you'd do better to refinance 3 units and offer seller financing or allow buyer to get conventional financing on the 4th unit.

Opes Advisors is a direct lender and mortgage broker; we can access all these options for you, or you could ask your current lender to pursue these options.

Good luck!

1 vote Thank Flag Link Mon Oct 15, 2012
David, your current lender should allow a reconveyence against the three remaining units allowing you to sell the vacant unit and record cross deeds. Feel free to contact me if I can be of help.

Travis Hale. Vanguard Properties. DRE #01343564
0 votes Thank Flag Link Sun Oct 21, 2012
Try First Republic.

Astrid Lacitis
Keynote Properties
415 860 0765
0 votes Thank Flag Link Sun Oct 14, 2012

I have a lender who should be able to do it. Drop me a line or call me at 415.722.5549

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
0 votes Thank Flag Link Sun Oct 14, 2012
Try calling Brandon Hoyles of RPM Mortgage. He has the answers for you:
415-738-7050 office
415-713-6938 mobile

Oggi Kashi
Broker Associate, Paragon Real Estate Group CA DRE 01844627
All data from sources deemed reliable but subject to errors and omissions, and not warranted.
Web Reference:
0 votes Thank Flag Link Sun Oct 14, 2012
An all-cash buyer might be the answer for the unit I want to sell – but I can't sell anything unless I can refinance my mortgage (which is currently on the entire BUILDING - i.e. pre-condo - I can't cross-deed and separate the units unless I can refinance. Cash buyer or not, I have to refi.

10% doesn't make any sense for a four-unit building. By definition the smallest percentage it's possible to own is 25%. So I'm confused by that.

If anyone has hints on where to find private money lenders (with reasonable rates) please let me know!
0 votes Thank Flag Link Sun Oct 14, 2012
All cash buyers may be the solution. Most lenders will not lend if there is an HOA and any one person or entity owns more han 10% of the units so even if you only owned one unit you might have trouble getting a loan. Another option may be hard money lenders aka private money lenders. Good luck!
0 votes Thank Flag Link Sun Oct 14, 2012
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