Financing in Suffern>Question Details

Dotty, Other/Just Looking in Suffern, NY

are condo mortgage lenders turning down loans because of perdentage of rentals and reserves?

Asked by Dotty, Suffern, NY Fri Jan 8, 2010

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Hi Dotty,

Although you asked this way back in 2010, I have just started to use Trulia as a realtor and thought I'd answer your question. It would always be prudent for banks to consider what percent of the condos in a condo complex are rentals. Many condo complexes have a percent that they will allow for rentals in order to keep the community in good condition. It would also be important for mortgage lenders to consider the reserves of the condo complex, since this, in part, defines the condo development's viability. This being said, I'm sure there are some lenders that are more careful about this than others. It would depend on the particular lender.

If you need any help in real estate, to buy or sell a condo, townhouse or home, please feel free to contact me at 914-588-2365.

Take care,
Ellen
Ellen Kippel
Licensed Real Estate Salesperson NY and NJ
Weichert Realtors
Mutli-Million Dollar Producer
Website : http://www.dreamhomesrocklandandorangeny.com
Website: http://www.ellensellsrealestate.com
Email: eskippel@aol.com
Cell: 914-588-2365
0 votes Thank Flag Link Sat Jun 1, 2013
Yes. Previously many condo loans were done with a method that was called "limited review" if the person was putting down a certain percent, and it went through the desktop originating process with that determination. Now, lenders are much more cautious with condos. They want to lend in complexes with higher owner-occupancy rates, and better financials. This is for 2 reasons. If there are too many rentals, it means that there are not enough people out there who want to buy the units. The reason they want to see reserves is because if the reserves are low, and there is a major repair needed, they will need a special assessment, which could become too much of a burden to the buyer. Now, even more than ever, banks look at things from one vantage point, what will happen if we have to foreclose, and how likely is it that this will happen. Of course maybe if some lenders were a bit more vigilant about this, we would not be in the situation we are in now.
0 votes Thank Flag Link Fri Jan 8, 2010
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