Piggyback Loan / Second Mortgage to avoid Full Condo Project Review

Asked by Sumit Bajaj, West New York, NJ Thu Jan 3, 2013


I am in a process of buying a house in Jersey City, NJ. I was pre-approved with 10% down.

Everything was going good with my mortgage process and just a day before closing, I came to know that there is some changes in mortgage guidelines(effective Dec1) that requires Full Condo Project Approval Review with LTV < 80%. (earlier it was 90%).
My lender did a full project review and found that the HoA doesnt have 10% fund in Reserve Account and hence all of a sudden the project in ineligible from Dec1 onwards.
That being said, I cannot get a mortgage for LTV 90%, even I have 750 Fisco with 8 months of reserves. In order to get a mortgage in the same building I need to put 20 down, which is quite not possible for me at this point of time.

Now, my lender is looking for another option to provide me 80-10-10 loan commonly know as Piggyback loan or Second Mortgage.
Since all these guidelines changed recently, he is not sure if 80-10-10 loan will help him to avoid full project app

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Jose Martinez, Agent, Hoboken, NJ
Sun Jan 6, 2013
Hi Sumit

I have a lot of experience in condo financing. If the condo does not have the reserves, you can see when they will have it. It is in the best interest of the condo, to have reserves. They will need this in order to have future sales occur.

Give me a call, I can help you get to the finish line.

Jose Martinez
0 votes
Tony Croft, Mortgage Broker Or Lender, Hoboken, NJ
Fri Jan 4, 2013
I took this from from my Fannie Mae notes...
“A limited project review will no longer be permitted on principal residences in condominium projects when the LTV/CLTV/HCLTV is greater than 80%. DU will require a full project review on principal residences in condominium projects when the LTV/CLTV/HCLTV is greater than 80%.”

A piggyback mortgage will not work in this case.

I would start looking for another condo to purchase.

0 votes
Thanks Tony for the reply...but if i go 80-10-10, the first mortgage will be LTV80% and hence should have limited review only... but i m not sure how 80-10-10 works
Flag Fri Jan 4, 2013
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