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Property Q&A in 90056 : Real Estate Advice

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Activity 2
Sun Aug 21, 2011
Donne Knudsen answered:
Jim - If you are requesting what the owner occupancy ratios for condos needs to be in order for a buyer to be able to finance a purchase loan, the ratio is 50%. However, there are also exceptions to that rule. For example, vacant or tenant-occupied REO units may be excluded from the calculation of the required owner-occupancy percentage.

However, having said that, there are also other factors to be considered when determining if a condo or the complex are eligible for traditional financing. When you have a lot of properties that are not paying their dues (this includes some REOs where the dues are in the form of liens and may not get paid until close of escrow), this depletes the HOAs reserves and this can also be a deal breaker for traditional financing.

Another deal breaker are pending litigations against the HOA, which happens a lot when vendors aren't getting paid for work or services performed for the HOA (especially if the HOA has cash reserve issues). For condo complexes that are in trouble, they are simply not eligible for traditional financing, expect those Fannie Mae REOs (called HomePath properties). These condo complexes don't require full HOA cert; just some basic HOA info and data.

I'm including info on the HomePath program. Let me know if you have any other questions and/or concerns or if I can be of any further assistance. Have a good day.
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