The house i bought is classified as condo instead of single family by appraiser. Anything I can do?

Asked by Newtomarket, Fremont, CA Tue Aug 30, 2011

I bought house in Castellija community in Fremont. When I bought the house, the appraiser mentioned and it is a single family detached home. Apparently the build registered it as townhouse community and in process of correcting. However when I am refinancing now, the appraiser is saying its a condo. The appraiser does not respond and lender not ready to use different appraiser. Any help since my refi lock is about to expire.

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27
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Tue Aug 30, 2011
Just so you have some info Newtomarket...

A 1-unit home is either classified as a single family residence, condominium, cooperative, manufactured home, or PUD. A townhome is just a description of how it looks & feels. Any of those can also be "attached" or "detached"... i.e. an "attached SFR", or a "detached condominium".

So when you have a single family residence, it doesn't matter if it's attached or detached, it qualifies either way (meaning there is no additional approval process).

*It doesn't sound like it's currently classified as a single family residence*

When you have a condominium, if it's attached, it needs to go through an additional review & approval process. Attached condominiums can be the toughest type of home to qualify.

A condominium can also be detached, when it is detached it is called a "site condominium" and actually is easier to approve than an attached condominium. A site condominium does not need FHA approval, and for conventional financing they are very easy to get approved too. A site condominium can look like a house, but usually has a "zero lot line" (meaning your neighbors side of their home is the wall in your sideyard).

*It sounds like worst case you have a site condominium*

This means that even if Avex won't finance you (I am not sure why they do not like site condominiums since as I said, they are very easy to approve) you should have plenty of other lenders as options.

If it's a PUD, it can also be attached or detached. PUD's never have to be approved by FHA. A detached PUD is treated just like a detached single family residence, and should not pose any difficulties with financing. An attached PUD has some additional requirements when using conventional financing, similar to an attached condominium, but not nearly as detailed.

*If you have a detached PUD, then you should have plenty of lenders offering you loan options*

I won't go into cooperatives or manufactured homes, because that information doesn't apply to your situation.
3 votes
The Medford…, Agent, Fremont, CA
Tue Aug 30, 2011
Get your Realtor to print out a copy of the tax record for your home - hopefully the property use code has changed. Send the document to your lender to dispute the appraisal.
.
2 votes
Steven Ornel…, Agent, Fremont, CA
Tue Aug 30, 2011
TU Shane!
An excellent summary/breakdown of the "attached" "detached" "PUD" "SFR" "Condo" "Co-op"..... Soup.


@ Newtomarket:

"Does 2) PTF still apply"

The fact you state "All docs are ready except for this issue." tends to make me believe this is a prior-to-docs condition and not a PTF. Meaning, they will not print docs for you to sign at escrow until this is cleared up; hence, my suggestion to get it moved to a PTF condition in hopes you can clear the confusion and possibly make the lock expiration deadline. You may want to ask about a lock extension as well (fee applies).

Bottom Line: I agree with Shane - focus on getting your property title straightened out ASAP.
1 vote
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Tue Aug 30, 2011
Well I really think you'll need to get your property title straightened out before you proceed, from the information you laid out it's still not clear to me what exactly it is - detached condominium or detached PUD?

If you go to another lender such as Avex, who is saying they can't do condominiums, and it turns out you have a detached condominium, you are going to run into the same issue with your new lender as you are now. So you do not want to repeat that mistake.

Avex Funding is one of the few lenders I have heard of that won't finance condominiums. Or perhaps they just can't refinance your condominium, whatever the situation is, it doesn't seem like they are being very candid with you on what the exact issue is. If they truly cared about you, they would make an effort to find another lender (even if they don't get any commission) to help do your refinance.

You've written some helpful responses, but I don't see where you said you have reviewed the CURRENT title report (this is the report from the title company insuring the refinance). Have you? Does it say "PUD", "Single Family Residence", or "Condominium"? If you have it in .pdf format I would be happy to review it if you'd like to email it to me.
1 vote
Steven Ornel…, Agent, Fremont, CA
Tue Aug 30, 2011
Public Record for your property shows: "1002 TOWNHOUSE STYLE-CONDOMINIUM". However, I also see that the MLS "Sold" Listing shows the property as "Residential Detached".

Re:
"I did not receive original preliminary report. I can ask the builder, but this is "original preliminary report" of my property ? "

Yes, specifically your property, if available.


Re:
"Maybe you can ask that the verification of the property as a detached single family home be moved to a prior-to-fund condition to save some time in case the change happens before your lock expiration. "

There are two hurdles you need to get over during a refi: 1) Prior-to-doc (PTD) conditions are those that must be satisfied before the lender’s underwriting department will generate and send loan docs for the Buyer to sign at escrow; 2) Prior-to-fund (PTF) conditions are those items that must be satisfied before the investor will “push the button” to send your new loan funds to escrow.

If time is short, and there is a possibility the Builder will be able to fix the problem quickly then you would want to have the lender move this issue to a PTF so you can sign loan docs and hopefully fund on or before you rate lock expiration date.
1 vote
John Dutra, , Fremont, CA
Tue Aug 30, 2011
Newtomarket,

Hopefully this will help you out. The appraiser is not the one that determines whether or not the complex is a condominium. It is how it was built and classified at the time for sale by the owner/developer - dependent upon their construction and recording preference.

Ask for a copy of the title report and you will see how it is listed. That will be the definer for the lender.
1 vote
C2 Financial…, Mortgage Broker Or Lender, San Diego, CA
Tue Aug 30, 2011
It sounds the public records are showing it as condo on the title report. Unless, that is changed on the public records it will be classified as a condo therefore the lender has to go off of that. I'm familiar with your development. Nice homes!
Web Reference:  http://www.bma-loans.com
1 vote
Grace Tam, , Dublin, CA
Thu May 9, 2013
I have a similar experience by one of my client's refi. Lender will ask for documentation to verify. And you may need to find out from Fremont City.
0 votes
Greg Cunning…, , Austin, TX
Thu May 9, 2013
It's a condo if you have condominium documents. That simple. Most of us call it a "Condominium Regime". In many areas or cities, filing a property as a condo allows the builder to place more units per acre than SFR or townhome regs.
0 votes
Sharon Paxson, Agent, Del Mar, CA
Mon Sep 5, 2011
HI Newtonmarket - I would agree with Melissa and contact the title insurance company and see how it was classified when you purchased the property.
0 votes
Melissa Zava…, Agent, Escondido, CA
Mon Sep 5, 2011
I think that the best advice would be to contact the title insurance company that insured the property when you purchased it. Did they insure the property as a condo or a single family home? Ask your title company to support you in working out this discrepancy.
0 votes
Riffat Husain, Agent, Fremont, CA
Fri Sep 2, 2011
This development has condos, townhomes, and single family homes with 0-lot. And all of them are PUD (planned unit development) with HOA (Home owners association).
Please visit the city of Fremont planning department on Liberty Street, the corner of Kearney & Liberty. They will be able to clarify this for you. And please do remember, if it is classified as one, you cannot change it to other.
0 votes
Rudi Hofmann, Mortgage Broker Or Lender, El Segundo, CA
Thu Sep 1, 2011
Newtomarket,

Heaven knows when this will get resolved. Most lenders finance condos. You will need to select another firm. Unfortunately, you will have another appraisal expense. Also, your HOA has to be approved by the government enterprise that is backing the loan. Today, a lot are not because more than 15% of the units have not paid their HOA dues.

Happy funding, Rudi
Web Reference:  http://www.umboc.com
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Wed Aug 31, 2011
There is an adjustment to interest rates if it is considered a condo & your loan-to-value is above 75% - no adjustment to the rate if it's 75% or below. There are quite a few lenders who do not have that condo rate adjustment even above 75% *as long as it's a detached condo*. We have no adjustments to the rate if it's a detached condo.
0 votes
Newtomarket, Home Owner, Fremont, CA
Wed Aug 31, 2011
Resolution:
Talked to another lender. From lender point of view it is a condominium. Apprarently some banks like Wells Fargo dont consider as condo (dont know the rationale), but from rate point of view I have noticed that the rate of a direct lender (considering as condo) is lesser or equal to Wells Fargo considering it as a SFH.

Bottomline: From lender point of view its a condo and rate is NOT the same as single family home.

Bit disappointed with Robson Homes who registered it wrongly with county and we are paying the price.
0 votes
Newtomarket, Home Owner, Fremont, CA
Wed Aug 31, 2011
As per the title company the type of property purchased is single family residential condominium.

As per preliminary report - Its a single family home detached.

I am not sure what needs to be corrected with title now.
0 votes
Newtomarket, Home Owner, Fremont, CA
Tue Aug 30, 2011
Hi Shane,
My fear is that I will have the same issue with other lender/ appraiser. I have already lost money during this financing.

I would really like to go with current lender since i have 4% locked, which I wont get if I go with different lender.

However if I go with different lender and spend more money on appraiser, what correction/ caution do I need to do before hand.
0 votes
Newtomarket, Home Owner, Fremont, CA
Tue Aug 30, 2011
Hi Steve,

I am refinancing and not buying/selling. All docs are ready except for this issue.

Does 2) PTF still apply
0 votes
Newtomarket, Home Owner, Fremont, CA
Tue Aug 30, 2011
Hi Steve,

My apologies, try 592 Pistache Terrace, Fremont CA 94539.

All properties are listed as SFR Detached Site Condominium, code 1600.

I did not receive original preliminary report. I can ask the builder, but this is "original preliminary report" of my property ?

I did not get your solution "Maybe you can ask that the verification of the property as a detached single family home be moved to a prior-to-fund condition to save some time in case the change happens before your lock expiration. "
0 votes
Steven Ornel…, Agent, Fremont, CA
Tue Aug 30, 2011
Newtomarket:

You did not provide a property address so I looked up the entire project. Via public record it appears that all of the properties sold in the complex are listed as "1002 TOWNHOUSE STYLE-CONDOMINIUM" or "1010 MULTI,CONDOMINIUMS COMMONARE".

At this point it looks like you are at the mercy of the Builder’s timeline to correct. Do you receive an original preliminary report when you purchased the property? Does the Builder have a copy? Maybe you can ask that the verification of the property as a detached single family home be moved to a prior-to-fund condition to save some time in case the change happens before your lock expiration.

Best, Steve
0 votes
Newtomarket, Home Owner, Fremont, CA
Tue Aug 30, 2011
As per Alameda county tax records: SFR Detached Site Condominium.

Can I fight the lender ? If yes with what information ?

If I cannot find lender, I would face the same issue with any other lender right ?
0 votes
Newtomarket, Home Owner, Fremont, CA
Tue Aug 30, 2011
@Shane - As per first appraisals report (when I bought house)
"County records indicates that the subject is a townhouse/condominium, however per Sales office and inspection the subject is a detached home. Per sales office the builder made a mistake with the county and are in the process of correcting the subject's zoning to single family detached home."

Zoning description: PUD, Single family residence

As per 2nd appraiser (of refi):
The subject is located in a condominium development of conforming units within City of fremont.

Zoning description: Condominium
0 votes
Krista Harri…, Agent, Bristol, CT
Tue Aug 30, 2011
Sounds like a PUD (planned unit development) or similar, where the houses are single-family detached homes but are classified as condos since it is a whole community (usually they share certain common grounds and facilities too). Therefore, the appraiser would be right to classify it as a condo. It also sounds like the title history and public records have it listed as a condo development. You could research the public records in your area and find the deed for the property (it should also reference the deed for the whole community). On the deeds it will state whether it is a condo development or a residential single-family home. If it says that it's a condo development, there is nothing that you can do about the appraisal until there is a correction filed in the public records. If it says that is a single-family home and not attached to any community development, then you should file an appraisal dispute form with the lender and submit the documents.
0 votes
John Juarez, Agent, Fremont, CA
Tue Aug 30, 2011
I suggest that you try another lender. John Dutra has helped numerous clients for us. His contact information is below in his comment.
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Tue Aug 30, 2011
"In process" of being converted from condos to single family housing doesn't mean it's "already completed".

I am a little confused though - when you bought it, it was zoned as a single family residence, but then afterwards it was re-zoned as condominiums, and now is in the process of being re-zoned back to single family residences?

Or has it actually been converted back to condominiums?

What does your title report say?
0 votes
Newtomarket, Home Owner, Fremont, CA
Tue Aug 30, 2011
Hi Shawn,

Avex funding does not do refi of condo. So right now I dont have any option ?

The appraiser is not calling back and Avex funding not ready to listen even after getting builder involved
0 votes
Newtomarket, Home Owner, Fremont, CA
Tue Aug 30, 2011
The issue I am having is my lender Avex funding is not ready to understand that it is a single family home even after sending the appraiser report during the time i bought the house.

Avex funding is blindly trusting the appraiser and the appraiser is not ready to correct his report and I cannot refi because of that.
0 votes
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