Condo Mortgage Financing

January 29th, 2010

condo building

Getting a condo loan approved seems to get harder and harder each day. Is condo mortgage financing changing? Below are the loan approval conditions I got on a recent loan submission for a condo purchase:

1. Buyer to get 20% HO6 dwelling coverage.

2. Statement from the property management company about the cleaning services in the condo’s budget. What type of cleaning services are they?

3. Statement from the appraiser on whether having no parking in the project has an effect on the value.

4. The certificate of insurance needs the deductible to be shown.

5. Fidelity coverage of $251,887.

Let’s review the absurdity of these.

1. You can read more about this in a recent blog post I did, click here.

2. Huh? Seriously? The underwriter wants me to waste my efforts in finding out what kind of cleaning company the condo has budgeted for? How is this pertinent at all? It is not like the underwriter is questioning a large, special assessment for a roof replacement. I could see the budgetary impact of that. This was a small line item in the budget, for CLEANING!

3. Of course not having parking affects value, doesn’t every rookie underwriter know that? But don’t they also know that this would ALREADY BE REFLECTED IN THE APPRAISED VALUE?! If the unit appraised for the purchase price without having parking, then the loan is safe, let’s move on!

4. I guess it is important for the underwriter to know if the condo has a $500 deductible or a $1000 deductible? Why? Not sure…

5. Fidelity insurance protects organizations from loss of money, securities, or inventory resulting from crime. Common Fidelity claims allege employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire transfer fraud, counterfeiting, and other criminal acts. This condo had $200,000 of fidelity insurance coverage. How and why the underwriter came up with her arbitrary number, based on some arbitrary formula I am sure, I have no idea.

Astonishingly, I got simple answers to all these, and although it took a few days, I got the underwriter all she wanted, the loan was approved, and we went to settlement.

This is just one more example of modern day banking. It’s not so modern, is it?

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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