I spent 15 years working the gulf coast market, mostly condos. Some of the most stressful moments I can remember came when I was selling a condo in a resort project where the project had a front desk for rentals, on-site housekeeping and 10% or less owner occupancy. In other words about 80% of my market. I always explained to my buyers that unless they were paying cash they should use a local lender.
Reason being that their out of town mortgage broker may not be familiar with federal guidelines concerning condominium sales in a resort market. It's not the brokers fault. They just haven't any experience with underwriters closing resort condos. The problem would start when the buyer would speak with their hometown mortgage lender they already have a relationship with.
Sure, Mr. Buyer, no problem! Well, probably ten to fifteen percent of the time my buyers would opt to use their hometown lender and most of the time we had a problem a few days before closing. the problem would almost always come during the underwriting process. The originator would do a good job of submitting the package to the underwriter like they usually do and the first thing the underwriter does is call the condo owners association. They have a list of questions to ask the association manager, a few of which are: Do you have weekly or nightly rentals? Do you have on-site maid service? Do less that 11% of the owners occupy the project? There are more questions, but these are the real killers. The project is rejected and there we sit a day or two before closing and "I'm sorry we can't do your loan".
Over the years I've heard this many times. Using federal guidelines the project is determined to be a condo-tell and therefore not eligible for a federally backed loan. The reason for using a local lender in the market where the condo is located is because local lenders deal with this all the time. They handle it by using investor driven loans using federal guidelines. The difference is the the investors know the scoop on condo-tells and if every thing else is in line they commit to the loan knowing they cannot federally insure the mortgage.
Needles to say the local lenders are used to pushing through last minute loans in 48 hours or less. The stress comes in when you explain this to your buyer and for some reason they still go with their hometown guy.
I live and work in Colorado now. I sold my REMAX office in Florida and now I sell ranches for a living. I love it!
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