No Questions Asked Loan?

May 11th, 2010

question mark pile

No, there is no such thing as a “no questions asked” loan. But there is something called “Limited Review” for Conforming (loans at $417,000 or less) condo loans. It makes getting a condo loan “much” easier.

When a lender gets a new Conforming loan it inputs a condo loan application and credit score into an automated underwriting system. If the resulting loan approval yields a “Limited Review” as part of the approval, that is good. That means some questions related to the condo will not be asked during underwriting.

What a Limited Review specifically means is that a lender will not require much of the documentation that would normally be required when underwriting a condo loan. For example, a “condo questionnaire” would not be required. This is the biggest advantage of a Limited Review. Assume you are buying a condo that has what a lender sees as an issue. An example of an issue would be a condo that has an insufficient reserve account. Not having to get the condo questionnaire would avoid the issue and means you will get a loan approval where you normally may not.

Avoiding the condo questionnaire also saves the money that a property manager would charge for that form. This fee is typically $50-$250.

You will not get a Limited Review authorization on a condo loan on a 5% or 10% down loan, or with a 680 or 700 credit score. To get a Limited Review you typically need a larger down payment such as 20% down. Also, a higher credit score such as 740 or higher is needed. So as you can see, there is not a “No Questions Asked Loan” for condos. However, a Limited Review may be a big help!

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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”.

8 Responses to “No Questions Asked Loan?”

  1. Jeff Annis says:

    Does the Limited Review also apply to refinances? Is there a big bump in the rate for Limited Review – there shouldn’t be for 20% down and 740 people! How long have Limited Review loans been around and will they stay around? This could save the condo market, although buyers may want to think twice about a condo that is ashamed of its condo questionnaire.

  2. brianm says:

    Hello Jeff. The Limited Review does apply to refinances. There is no increase in the interest rate for this. Limited review for condo loans has been around for quite a long time, many years. However, I should make it clear, this is not an actual “loan program”, it is simply an underwriting “allowance”. I do think it is a huge benefit for borrowers and lenders that know how to use it, but I do not know that it will save the condo market. After all it is not every borrower who has a lot of equity and a high credit score. Check in with any other questions.

  3. Emily says:

    Hi thanks for the blog. I am trying to refinance my mortgage but ran into a frustrating situation: the developer in my building owns more than 10% of the total units. Seems like it’s impossible for me to get a conventional loan now. I wonder if the limited review can save me. I’ve heard differet opinions, some said the guidelines have changed and the exception for this situation is no longer available in 2012, some said it’s still available. Could you shed some lights on this? Thank you!

  4. brianm says:

    Hello Emily, I think you can try and see if a Limited Review gets you past the 10% ownership issue, but it is not a guarantee. There are a lot of moving parts, and it will depend on the lender that is used, their underwriter, their condo policies, their Limited Review rules, etc. It is far too much to figure out in advance, so you’d have to pick a lender and risk the appraisal fee, and simply go for it and see what happens. Where is the property located? And what is the amount you owe, and how much do you think the place is worth? And what is the current rate? Maybe I can give you some guidance.

  5. Winston says:

    Can unwarranted condo be eligible for limited review?

  6. brianm says:

    Yes, any condo can be eligible for Limited Review. But a buyer typically needs at least 20% down, 25% down is even better. And a high credit score is mandatory, 740 or higher is best. Then any condo can be eligible for Limited Review, if the buyer is strong enough to get the loan to be eligible for the Limited Review process.

  7. Yury says:

    Does the borrower need to ask for a Limited Review or is it initiated by the Lender? In other words, if you are approved for a loan and then begin the process with a lender, how do you get Limited Review?

  8. brianm says:

    Hello Yury. No request is needed, it is an automatic part of the “automated underwriting” (AU) process. When the lender runs the loan through any AU process, the software will tell the lender if the loan is eligible for Limited Review or not. A mortgage borrower may want to ask to make sure the lender did not overlook it, but they usually have an eye out for things like that.

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