I've probably funded 40 VA home loans in 2009, many of them for unapproved condominium complexes. In Southern California, it's quite common along the coastal communities for buyers to look at condos, townhomes, or PUDs as lower-cost alternatives to single-family homes. Declining prices, along with higher VA loan limits have afforded many active duty and former service members the opportunity to scoop up a piece of the California coastal lifestyle by purchasing one of those properties.
Sellers often cringe when they receive an offer using VA home loan financing. The general thought is that the VA condominum complex approval process is time-consuming, onerous, and difficult...
Nothing could be further from the truth.
All loan types, including FHA and conventional vet the condominium association's organizational documents, finances, and residency mix. In fact, the VA guidelines tend to be the least restrictive of all three loan types.
Three tips for real estate agents when presenting an offer, on an unapproved complex, with a VA mortgage:
1- Use a VA lender who has been through the VA approval process MANY times.
2-Review the required documents' checklist:
The document checklist is available in Chapter 16 of the VA Lender’s Handbook. Specifically, the table of required documents is available on page 16A.03. I suggest that the loan originator AND both real estate agents AND the escrow officer review this table as soon as an agreement of sale is executed. At first glance, the list appears to be ominous (lots of dead trees). Upon more careful scrutiny, it is plain to see that only 5-6 documents are required; the other 20 or so are only required IF AVAILABLE.
3- Consider the time saved by using an attorney's opinion letter:
The key component to the VA condominium complex approval is the Attorney’s Opinion Letter. Essentially, the VA relies on the expertise of an independent attorney to evaluate the condominium documents and offer an opinion as to whether or not those documents comply with the VA regulations. An attorney opinion letter is NOT a requirement for the submission package but attempting this without one is not recommended. While it adds another layer of cost to the approval process, the result is a greatly reduced examination time at the VA.
VA condo approvals are quite easy if you know what to do. Follow these three tips to guarantee a smooth transaction or contact me with any questions you might have.