Tuesday, June 28, 2016

Condo Certs are difficult to obtain!

Is it any wonder nobody wants to originate a mortgage for a condo these days? Not only are there exceptionally stringent guidelines to adhere to as far as whether the project is eligible for financing, but it costs the donation of your left kidney to obtain the documents required by Fannie Mae to determine this.

For a good while the trend has been for Property Management companies to steer us to an automated website in order to obtain the elusive condo questionnaire, Master Insurance Policy, Budget, CCRs, Litigation Information, and Bylaws. In order for one to gain access to these all important items, it is required to pay upwards of $250! After waiting a few days, time that can barely be spared, the documents are available to download, at which point you discover the Master Insurance Declaration Page is expired, or the project is non-warrantable, which sees your $250 go up in flames as your money was spent on a project that is not worthy of a regular loan.

I have a number of issues with this entire process.
1.       Why is the listing agent not obtaining these items prior to listing the property for sale? It’s a gross misrepresentation if  the listing doesn’t indicate the possibility that it cannot be financed. And, what kind of service are they offering the seller without this information in hand
2.       Why are the condo cert online services allowed to charge, indiscriminately it seems, for each item, or to fill out a lender specific questionnaire, and then add on rush fees of varying amounts as they know we have little to no time to get the official condo approval from our lenders
3.       Why should the buyer pay out at least $250, and likely more, only to discover that they can’t actually buy the home – different than obtaining a home inspection that lists repairs that can actually be fixed
To address the first item, I’m appalled that when a client of mine is home shopping, they happen upon a nice condo, and their knowledgeable agent asks me what specific questions they need to request of the listing agent to determine the eligibility for financing, that the majority of listing agents have absolutely no idea, and neither have they tried to find out, unless some unfortunate individual had already been in contract to purchase and found out the hard and expensive way that it could not be financed. Do your fiduciary duty to your seller and buy the information before you list it!
For my second issue, I honestly have a difficult time believing that in this post TRID era, where I am basically chastised if I mistakenly misquote a tiny fee of any kind, that I cannot obtain the fees for the condo documents in order to disclose them, until we are in escrow, I am given the project name, and have the correct website to go to. And, once I do receive the fees, I can be indiscriminately charged for different rush levels, specific forms, and whether I need a hard copy, so that my original $190 bill becomes $390 in a nanosecond. That’s almost the same cost as an appraisal, and I feel there is vastly less skill or elbow grease gone into the electronic mailing of documents that never change. How is this allowed to happen?
Finally, I don’t agree that the buyer of a property should have to wait to find out if a loan can even be originated on their dream home after going through the rigmarole of writing a contract, being accepted, getting earnest money deposits into escrow, starting their inspections, which is more money out of their pocket, and usually all because the agents want a super quick close, so there is no time to waste. The whole thing just stinks!
So, while my rant is partially at the automated services that are now predominantly controlling the documentation we need and charging a small fortune in the process, I am equally upset that Realtors are not offering the right level of service to their sellers by feigning ignorance of lending requirements, or indifference, and are not willing to do their due diligence when accepting their seller as a client. And, to top it all, are then rude in their correspondence when the Loan Originator breaks the news that the property can only be financed by a higher rate, higher down payment portfolio loan.
It’s about time more Realtors were better educated on the nuances of lending, and cared more about the service they offer, than a quick close leading to their pay check…or in this case, no pay check. And, in this age of over-regulation there should also be more rules in place that determine allowable costs for obtaining necessary information that is hidden away under lock an key until passage is paid.

Thank you to Suzanna Ravin  for this excellent article.  Suzanna has been working in the lending industry for the last twelve years and I agree with her comments. 

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