Thursday, February 14, 2008

HAS YOUR COMMUNITY ASSOCIATION BEEN PUT ON A LENDER'S BLACKLIST? By Donna Berger, Esq.

If any of your community members have gotten close to selling units in the past year only to have the closings fail as a result of their potential purchasers being unable to secure financing, the reason could be that your association has been blacklisted by some lenders.
There are several reasons why a building would be deemed undesirable by a lender and many, but not all of them, relate to whether or not the loans meet the standards of Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Mortgage Corp.) and thus, are eligible to be sold on the secondary market. About 70% of a building must be owner-occupied for it to be considered suitable to be sold to Fannie Mae or Freddie Mac.
As such, buildings with heavy concentrations of investor owners might wind up on a lender blacklist.
Other areas that are being scrutinized closely by lenders in this market are the number of delinquencies in a particular community and any ongoing litigation involving boards, unit owners, developers and vendors.
Please click on the following link to view the properties currently blacklisted by Washington Mutual, BankUnited, Popular Mortgage and Citimortgage. Of course, these lists do not represent the totality of blacklisted property in the State of Florida but are only a representative sampling.
http://www.dailybusinessreview.com/images/news_photos/47126/BankUnited.pdf
http://www.dailybusinessreview.com/images/news_photos/47126/WAMU.pdf
http://www.dailybusinessreview.com/images/news_photos/47126/Popular%20mortgage.pdf
http://www.dailybusinessreview.com/images/news_photos/47126/Citimortgage%20questionnaire.pdf

People wishing to purchase in communities that have been blacklisted by institutional lenders will have to resort to "hard-money" lenders, often paying twice the expected interest rate on shorter terms and with a requirement for a much higher down payment.
If your community is fortunate enough to not be on one of these blacklists, it is important to ensure that you stay off by maintaining the percentage of owner-occupied units above the 70% threshold. One way to discourage the purchase of condominium units for investment purposes only is to impose a waiting period between the time someone takes title and when the unit can be rented out. If your governing documents do not already contain such language, please discuss the usefulness of such an amendment with your association attorney.

Lastly, if any of you ever wonder what groups push for some of the over-reaching, anti-board legislative proposals we've seen over the last few years, please check out the following site: http://hoatruebeliever.com/ccfj.htm

There are groups like this all over the country who use similar methodolgies and scare tactics to trick the media and state legislatures in to thinking the very real problems in some communities are the norm rather than the exception. It is absolutely essential that the vast majority of owners living in common interest ownership communities become aware of the existence of these groups, familiar with their tactics and willing to fight back with reason and logic.

4 comments:

  1. Thank you for the great information Ms. Berger. I live in one of the blacklisted communities and will definitely bring this up at our next community meeting.

    By the way I saw the great feature on you in the Estate Lifestyle Magazine. Congratulations. You should update your blog photo with the picture from the feature. Keep up the good work!!

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  2. Very interesting post. Are these lender practices legal? Is it possible this "blacklisting" violates some Federal law? Would be interested to hear your thoughts.

    You should post more often. The condo "commandos" out there (at least the rationale ones), love to hear from you.

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  3. I am sure you will not approve this post, but you should stop taking potshotz at Jan Bergeman. Just because Mr. Bergeman does not agree with your views, dows not mean you should take personal shots at him. Mr. Bergeman has deveote ours of his time to help florida residents and he should be commended and not scolded by a six figure attorney trying to protect her income.

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  4. Yes, these practices are legal and the lenders chalk them down to protecting their assets. However, I'm certain that all those buildings who were blacklisted by certain lenders will remember that when the market rebounds.

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