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#1709986 - 06/13/12 07:26 PM Adverse Action Notice
dac Offline
100 Club
Joined: Sep 2009
Posts: 234
We had a loan declined because it was a Non Warrantable Condo that is not eligible to be sold to Fannie Mae or Freddie Mac because they DO NOT fit into one of the following three classes below:

CLASS I

1. Developers control of the homeowners association has been turned over to the condo owners
2. Project is not subject to additional phasing or add-ons which have not yet been completed
3. All common elements and amenities must be fully installed, completed and in operation
4. 70% of all units in the entire development must have been sold and or legally obligated to close
5. 70% of all units in the entire development must have been sold to owner occupants

CLASS II

1. Recent or current condominium conversions (from apartments)
2. Homeowners association has been controlled by the unit owners (other than the developer) for less than two years
3. Project is not subject to phasing or add-ons which have not yet been completed
4. All common elements and amenities are fully installed, completed and in operation
5. 70% of the units in the entire development must have been sold and/or legally obligated to close
6. 70% of the units in the entire development must have been sold to owner occupants
7. No more than 15% of the current unit owners are more than one month delinquent in payment of homeowners dues or assessments

CLASS III

1. Homeowners Association has been controlled by unit owners (other than developer) for at least one year
2. Project is not subject to phasing or add-ons
3. All common amenities are fully installed, completed, and in operation
4. 90% of the units have been sold (owner-occupancy of at least 60%)

A CONDO QUESTIONNAIRE MUST BE COMPLETED BY THE MANAGEMENT TO DETERMINE PROJECT ELIGIBILITY
Because FNMA would not purchase mortgages secured by non-warrantable condominiums, many banks consider these condos to be more risky, and thus increase the interest rate accordingly.

My question-What reason should we use on the AAN?

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#1710029 - 06/13/12 08:01 PM Re: Adverse Action Notice dac
tic toc Offline
100 Club
Joined: May 2006
Posts: 138
Springfield IL
I just had the same circumstance, but in our case, we could not offer an in-house loan, either.(older condo, no firewall). Which was an Insurance issue. I was fortunate,though,the borrower withdrew. So no AA needed.

I'm thinking, you might be able to use "Other, not eligible for Investor Loan Programs". (Fannie or Freddie), Just a thought.
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tic-toc, times a wastin!

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#1710036 - 06/13/12 08:07 PM Re: Adverse Action Notice tic toc
dac Offline
100 Club
Joined: Sep 2009
Posts: 234
You would not use collateral not sufficent right?

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#1710046 - 06/13/12 08:18 PM Re: Adverse Action Notice dac
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
I just had the same circumstance, but in our case, we could not offer an in-house loan, either.(older condo, no firewall). Which was an Insurance issue. I was fortunate,though,the borrower withdrew. So no AA needed.

Based on this short description of what happened you had a denial and owe the applicant an AAN.



You would not use collateral not sufficent right?

We would use "type or value of collateral not sufficient".
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1710063 - 06/13/12 08:28 PM Re: Adverse Action Notice Dan Persfull
dac Offline
100 Club
Joined: Sep 2009
Posts: 234
We have these choices:
Inadequate collateral
Unacceptable Property

Would unacceptable property be the proper choice?

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#1710137 - 06/13/12 11:26 PM Re: Adverse Action Notice dac
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
Out of the choices you have, yes.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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