#1. The complex has too many renters and no enough owners residing in the complex. Normally the complex may not exceed 10% renters. Mortgage lenders would not approve a mortgage loan if this condition exist. This include government (FHA or VA) as well as conventional mortgage loans.
#2. There is insufficient funds in the bank account of the homeowners association to keep up the maintenance and pay for other debts of the association. If there are delinquent owners that have not or refuse to pay the association fees and dues this is a serious problem. You would not get a mortgage lender to approve a mortgage loan to someone that would want to purchase a rental in your complex.
If this is the case, no mortgage lender would approve anyone a mortgage loan for the purchase of your property. These guidelines are issued by FHA, which is a government agency. However, most all mortgages are sold on the secondary money market. Since the government is one of the largest buyers of mortgage notes, most all lenders follow these guidelines so as to be able to sell your buyers mortgage almost immediately after it close.
There are other alternatives that you might use.
#1 Sell to an investor
#2. Carry the mortgage yourself.
#3.Do some sort of lease or rent to own with your buyer.
#4. Use the property as a rental if you are able to and there are less than 10% current renters in the complex.
I hope this has been of some benefit to you, good luck.
"FIGHT ON"
We as lenders have a list of questions that we have to have the HOA fill in before we can lend. A high rate of rental properties, a high rate of foreclosures, a high rate of HOA dues that are late can all cause the complex to be classified as "uninsurable, or high risk" to the lender. To those who say go conventional... Fannie Mae has some of the same guidelines. I had to deny one yesterday because more than 10% of the homes were rental properties. Fannie Mae would not allow the conventional loan due to this.
You can work a lease to own contract with the buyer. You can do a land contract. You can see if your lender will finance the buyer and release you from the loan.
I know sometimes FHA loans require a certain amount of HOA extras. Was the loan in question an FHA loan? Typically the regular loans dont require this that I know of. Check it out, and net time say no FHA loans for this property...if htat's the reason.
Chris is correct:
- having a conventional loan might be an idea
- if all else fails, you would need a cash buyer.
I am selling my property in AZ. I found a buyer, we agreed on all the terms. The buyer was pre-approved, I am in good standing with my property. However, the buyer's bank did not approve the loan. Apparently the HOA in which my property is located has a high deficiency rate with unpaid dues from residents. A second mortgage lender has also denied the loan. I am afraid that I will lose the deal over this and I may not be able to sell the property at all. Any suggestions or advice on what I can do?
