Home Buying in Cupertino>Question Details

Diana,  in San Francisco, CA

Is it difficult or impossible to get a loan for a condo with HOA pending litigation?

Asked by Diana, San Francisco, CA Thu Jan 29, 2009

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14
Hi Diana:

Its not impossible, but difficult to get a loan.

There are Lenders and Brokers offering Loans for Condos in litigation.

A lot also depends whether this is a Purchase Loan or Refinance Loan.

Good luck.

Ruth

http://www.ruthandperry.com/
0 votes Thank Flag Link Wed Apr 25, 2012
It is possible with 20% down.
0 votes Thank Flag Link Sun Mar 18, 2012
It's usually just difficult, not impossible. There are plenty of condo complexes around the south bay under HOA litigation and I've found a few lenders willing to loan on most of them. The rates and terms for those approved complexes are not much different from conventional loans.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Sun Mar 18, 2012
Difficult to impossible if using FHA financing. You might try a local bank or a credit union.
0 votes Thank Flag Link Sat Mar 17, 2012
Difficult - you have to find "shelf" loans, meaning special loans created by local smaller banks or credit unions to fill in the loaning gaps out there the bigger banks don't touch.
0 votes Thank Flag Link Tue Apr 12, 2011
Hello,

It isn't impossible to obtain financing. I"m a loan officer at First Capital Mortgage and we have closed a lot of loans for condo units in a pending litigation, such as SB 800 litigation. As long as the individual comes in with 20% down or on a refinance, at least 20% equity and the loan amount is less than or equal to 417K, I can get a limited review on a condo complex that will only be concerned with reviewing the master insurance policy of the HOA, thereby avoiding the HOA cert that would normally disclose the litigation against the HOA.

If you'd like further information, please let me know.

Michael Abram
310-434-1718
mabram@firstcapitalmtg.com
0 votes Thank Flag Link Tue Apr 12, 2011
not impossible but going to be tuff. More than likely have to put 30% down & maybe go conventional....

Steve Eveleth StevesHomeSearch.com
0 votes Thank Flag Link Tue Apr 28, 2009
Not impossible but tuff. More than likely have to put at least 30% down, not sure if FHA will do im thinking not.....
0 votes Thank Flag Link Tue Apr 28, 2009
Hi Diana and thanks for your question.

Unfortunately, depending on the type of litigation (construction litigation vs. homeowner enforcement), a lawsuit--especially in today's trepidacious mortgage market--may stifle any owner's chance of refinancing and even worse, may prevent others from selling their homes. This is one of the reasons that, if a construction related lawsuit, I tend to advocate working with the developer in mediation or arbitration rather than through lawsuits, which ultimately damages both the developer and the homeowners association while making the two attorneys financially endowed.

If your association is already in the midst of a lawsuit, talk with your Association Manager to determine which lenders have been successfully doing loans on the units in the community. Usually, if a mortgage loan is even possible in this situation, Association Managers will (by virtue of having to fill out the documents for lenders) know exactly who you might contact to obtain a loan.

Good luck!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
co-Author, "Homeowners Associations: A Guide to Leadership"
0 votes Thank Flag Link Tue Apr 28, 2009
Hi Diana,

Order a condo certs and submit it to your lender: http://www.condocerts.com. These reports include information regarding the HOA and the financial viability of the project including any pending litigation. Loan underwriters use this information, in addition to information obtained from the HOA, to determine if a condo is what is called "non-warrantable." Lenders are avoiding lending on properties that can be deamed as such. One possible solution that I've worked through is to negotiate with the seller that they pay any resulting assessments charged in relation to the cost or outcome of the litigation. This puts the lender at ease knowing that any related assessment will not have to come out of your pocket and possibly hinder you from making your loan payments.

Best of luck!!
Tara

Tara Steinke
San Diego Real Estate Specialist
Real Estate Sales and Appraisals
619-384-6014
mysandiegoagent@gmail.com
0 votes Thank Flag Link Fri Jan 30, 2009
Diana,

It depends what the litigation is about, how far into the litigation they are, and how far into the repair process (if the lititgation is over but repairs haven't been completed). The short of it is probably no. I suggest calling my loan broker, Greg Vanslow at 650 948-0456, and he can give you the ins and outs of it.
0 votes Thank Flag Link Fri Jan 30, 2009
i would say difficult to impossible.
Arn
0 votes Thank Flag Link Thu Jan 29, 2009
almost every condo complex in Las Vegas is in litigation.. It just depends on what the issues are. Some are more complex than others. If it's a simple slip and fall suit than possibly the attorney's can get you a letter of the situation to give to your lender. Some construction issues are more complex. Every situation is different. Remember that in a condo complex there are so many people living there it's bond to have litigation. some people are just sue happy. I hope this helps..
0 votes Thank Flag Link Thu Jan 29, 2009
Your best bet is to check with local banks and fill them in up front on what they'll be up against. I just closed one in December that is in litigation. Turned down by 6 lenders until getting it to the right place. It wasn't a stressless transaction but it can be done.
0 votes Thank Flag Link Thu Jan 29, 2009
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