Why Condo Mortgages Are Getting Tougher
Does it seem like condo mortgages are getting harder? That is because they are!
After the tragic Surfside, Florida condo collapse, mortgage lenders (and Fannie Mae/Freddie Mac) re-evaluated how they underwrite condo loans. While the human loss was the true tragedy, the financial aftermath prompted much tighter lending rules for condos.
There were also business repercussions. And there were mortgage losses after that collapse. And as a result Fannie Mae and Freddie Mac have changed condo mortgage guidelines.
The Role of the Condo Questionnaire
A condo questionnaire is one of the most critical documents a mortgage lender must get to approve a mortgage in a condo. They are pages long, and complicated to fill out. A lot of condo property managers use third parties to complete them. A popular one is called HomeWiseDocs. Their service can be expensive, anywhere from $350-$750.
👉 Pro tip: Don’t Waive Your Financing Contingency When Buying a Condo?
These questionnaires rarely include structural details. That’s because most property managers (or their vendors) aren’t engineers — and don’t want legal liability for commenting on safety or integrity.
So How Do Lenders Get Structural Info?
Knowledge of the structure of a condo is mandatory to approve a condo mortgage. Lenders may require recent condo association meeting minutes. Underwriters read them closely, looking for any mention of structural issues. If concerns are raised in the minutes, your mortgage could be declined.
If there’s no mention of structural problems, you’re likely in the clear.
👉 Other reading: General Condo Mortgage Guidelines
Bottom Line
Condo mortgages aren’t impossible — just more thorough. And that’s a good thing. These changes are designed to protect you as a buyer.
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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”.
