Condominium and home owners associations desperate for money are experimenting with a tactic called “reverse foreclosure” to force banks to pay association fees.

The process works like this: When a borrower stops paying the mortgage, banks often delay taking the property into foreclosure. When banks delay, neither the former home owner nor the bank is paying association fees.

To remedy this, the association files its own foreclosure notice, taking over the title. The association can’t sell the property because of the bank’s lien on it. So the association goes to court, renounces the property and asks the judge to give the title back to the bank.

When the judge does so, the bank has to pay the fees. Experts say this technique is becoming very popular in parts of the country where there are a lot of foreclosed condos.

Source: Miami Herald, Rachael Lee Coleman (03/07/2010)

Many people hear the name Mckeon associated with a style of condominiums but cannot find much on the internet about them.  What this is referring to is the McKeon Corporation which build what is also termed as four plexes all over California in the early sixties.  This was also referred to as the mass production of condominiums.  You can find McKeon style four plexes pretty much all over the place but heavily concentrated in California.

McKeon condomiums typically have a #1 unit in front which is usually a 2 bedroom 1 bath unit with a living room and kitchen.  The #2 & #3 units are usually kitchen and living room downstairs and two bedrooms and a bath upstairs. The #4 unit is usually the rear unit and has a porch and pverlooks the alley ways of the complex.  You usually have 2 two car garages, each garage being shared by two units with storage units and overheard storage for each unit as well.

The issues I have found in my experience with this style condominium is:

1. 1.  Unit #2 & #3’s toilet upstairs usually sits on top of #1 & #4 overheard storage units SO, these toilets tend to leak and the damage is above another units storage.  HOA’s should make an effort to assign these spaces based on the unit is would effect, it may not be smooth numbering but would keep each units responsibility more intact.
2. Buyers should always look at the HOA docs and meeting agendas.  Some complexes do not cover the inside of the garage which leaves the responsibility to the two unit owners for interior wall damage and garage door openers and sometimes the garage doors themselves.

We have seen some great things done with the Mckeon interiors such as granite countertops, remodeled kitchens and more.  Here are a few examples:

You can find this style condominium mostly in Citrus Heights, Sacramento and surrounding areas.  Elk Grove has a small complex off of El Mirador off of Elk Grove Florin Road. 

As always if you are looking for a condominium in the Sacramento market, contact SacramentoCondos.com at info@SacramentoCondos .com or through one of our links on the front page.

Bruce Slaton

SacramentoCondos.com

SacramentoCondos.com is pleased to bring you information today about Jasmine in Elk Grove.

These condominiums built in Elk Grove by Pacific West were built approximately in 2006 and feature four floor plans ranging from a 1 bedroom 1 bath 1185 square foot unit to the largest unit the 2 bedroom 2 bath + loft unit 1728 square feet model.

The models are as follows:

     Residence One

     1 Bedroom 1 Bath with Loft  1 Car Attached Garage             1185 Sq Feet

     Residence Two

     2 Bedroom 2 Bath (Ground Floor) 2 Car Tandem Garage  1314 Sq Ft

     Residence Three

     2 Bedroom 2 Bath w/Loft  2 Car Attached Garage                1519 Sq Ft

     Residence Four

     2 Bedroom 2 Bath w/Loft  2 Car Attached Garage                1728 Sq Ft

I personally feel Pacific West is one of the best builders in the Sacramento Region for condominiums, between their agressive growth with Syrah in Natomas to projects in Folsom, Roseville and West Sacramento, they completed projects in the region that condominium buyers wanted. 

Some of the standard features in most of their complexes were inside laundry areas, attached direct access garages and granite countertops standard in most of not all of thier plans.  Jasmine has the added benefit of also being a secure gated complex surrounded by residential homes, a major plus years later in resale values in my opinion.

Keep in mind these units sold between 259,900 and 339,900 and now are selling for the low to mid 100’s, I personally believe they are a great investment if you can get into one.

Financing update (12/5/09):  FHA and Conventional financing may not be possible in this complex due to late HOA fees ratios and occupancy ratios, make sure to ask your lender and/or agent (or if you dont have an agent email us at info@SacramentoCondos.com) and know if the program you are using will work in this complex.

And being in Elk Grove, this complex is in the Elk Grove Unified School Disctrict.

Thank you for allowing us to bring you Jasmine in Elk Grove and we look forward to adding more complexes as quickly as possible.  Please feel free to comment if you have updates for this complex or want to share your experience living here.

Bruce Slaton Lic # 01305148

SacramentoCondos.com

Just use the link on the front page of the new SacramentoCondos.com site and join our fan page on Facebook.  Share information about your complex, ask others who join about their experiences and enjoy the fanpage

Bruce Slaton Lic # 01305148

SacramentoCondos.com

Visit our Twitter page at:

http://twitter.com/@sacramentocondo

We’ll post new info and blog posts to our Twitter page as we move forward, we hope you find this a useful addition to our SacramentoCondos.com community.

Bruce Slaton Lic# 01305148

SacramentoCondos.com

Have you recently done a condominium remodel and want to show it off?  Post it to our new YouTube page at:

http://www.youtube.com/user/SacramentoCondos

We look forward to seeing your remodel

Bruce Slaton Lic # 01305148

SacramentoCondos.com

SacramentoCondos.com has partnered with ForeclosureOptions.com to assist condominium owners facing forclosure avoid a bad mark on their credit.  Through our partnership for ForeclosureOptions, we will be able assist homeowners work through the short sale process and mitigate damages they may owe after a foreclosure sale and/or create a plan to sell the condominium for less than is owed to the lender.  Through our partnership we were just able to sell a homeowers condo and while she would have been responsible for over 40K on the second loan, we were able to get it settled for 1K and successfully closed the short sale in November and avoid a damaging foreclosure on the clients credit.  If you are facing foreclosure and need to schedule a consultation you can email us at info@SacramentoCondos.com or visit our partner website at www.ForeclosureOptions.com .

Bruce Slaton Lic # 01305148

SacramentoCondos.com

SacramentoCondos.com acquired CampusCommons.com on December 1st and will redirect all content to the SacramentoCondos.com site within the next two weeks.  We will offer content for those buyers and sellers of the Campus Commons community in 2010.  Campus Commons is approximately 1160 single family attached and detached homes in the Fair Oaks Blvd and Howe Ave area of Sacramento.  Within close proximaty to Sacramento State University, Arden Fair Shopping Center and a wide array of dining and entertainment.

We look forward to serving the Campus Commons community!

Bruce Slaton Lic # 01305148

SacramentoCondos.com

In November the Federal Housing Adminstration (FHA) accounded the permanent baseline guidance for condominium project eligibility.  (ie the guidelines they would use when determining if they will allow an FHA loan to be made in a complex)  While they have delayed implementation until I beleive December 7th of 2009 and they may change again before being placed into effect, here are the most common one which will effect condominium buyers in Sacramento:

1.  No more than 50% of the units in the complex can be financed with an FHA loan. 

There are exceptions to this such as if the complex is 100% finished and has been completed for at least a year, 100 percent of the units have been sold and no entity owns more than 1o percent of the units, the project’s budget provides for the funcding of replacement reserves for capital expenditures and deffered maintenance in an account representing at least 10% of the budget. control of the HOA has been transferred to the owners and the owner occupant ratio is at last 50 percent.

2.  Owner Occupant Requirements

 At least 50 percent of the units must be owner occupied or sold to owners who intend to occupy the units. 

As more details of the FHA requirements are released, we will clarify and post them.  If you have any questions about lending issues in condominiums, please email us at info@SacramentoCondos.com

Bruce Slaton  Lic # 01305148

SacramentoCondos.com

We have received many an email detailing how buyer have been told they cannot purchase in certain complexes or their offers were rejected because of ratios.  This is not because the Sellers are not wanting to accept FHA financing or Conventional financing it because of the ever evolving lender guidelines.

This is basically the current issues with Conventional financing or those loans being repurchased by Fannie Mae or Freddie Mac with condominiums:

Recently, several of our lender partners noted two new mortgage fees implemented by Fannie Mae affecting condo buyers — a .75% condo add on fee and a 1.75% additional fee for investors — both applicable to loans with a loan-to-value rate greater than 75%.

Well, there’s more. Effective March 1, 2009, Fannie Mae is implementing condo guideline changes “in light of the current condo market and the need to mitigate risk on condo loans”. Some of these changes may affect a buyer’s ability to obtain conventional condo loans for new and established condos.

A condo project is “established” if 90% of the units have been sold, is complete and the HOA has been turned over to the owners. A condo project is “new” if less than 90% have been sold, is not completed, is subject to phasing or if the HOA has not been turned over to unit owners.

Overview of Fannie Mae condo guideline changes:

• For new construction and newly converted condo developments, 70% of the units must be pre-sold (closed or under contract). This is being increased from 51%.
• No more than 15% of a condo project units can be more than 30 days delinquent on HOA dues. This is an existing guideline that is now being applied to new condo projects. The calculation was also changed from being 15% of HOA fee payments to 15% of total units.
• Fidelity insurance will be required for condos with 20 or more units, ensuring that homeowner association funds are protected. Presently, this requirement applies to new projects and is now being extended to include established condos.
• A requirement that borrowers must now obtain a condo-owners insurance policy unless the master policy provides interior unit coverage; coverage may not be less than 20% of the assessed value. A condo-owners policy, known as an HO-6 policy, covers personal property, personal liability, and the physical unit from the studs and in. Many policies also include special assessment coverage or the option to include a special assessment coverage rider.
• No more than 10% of a project can be owned by a single entity.
• No more than 20% of a project can consist of non-residential space.
• The homeowners association must have at least 10% of its budgeted income designated for replacement reserves and adequate funds budgeted for the insurance deductible.

According to a Fannie Mae, the guidelines can be modified for condo projects on a case-by-case basis. Therefore, these guidelines may not apply to all condo projects.

Most lenders follow Fannie Mae guidelines and as you see above it just makes it more difficult (but not impossible) to close deals in some complexes.  These issues can affect any complex, good and bad.

The 15% HOA rule changes on a daily basis in some complexes.  As units are foreclosed on they start over as the delinquent HOA dues are written off and also when collection accounts come in etc.  Jasmine in Elk Grove had approximately 36% of the HOA units delinquent at one time in the last several months BUT we were still able to attract a cash buyer who just closed a short sale with us in that complex.

Why does Fannie Mae issue these guidelines?  Risk.   Its all part of the risk factor they have to take in consideration when deciding when to purchase loans.  Remember what happens is a lender makes the loan to you and then in a good portion of the cases resales it to Fannie Mae and relends the money out to the next borrower.

We’ll go over more of these requirements as they developed and we’ll go over the proposed FHA changes in the next few posts.

As always, if you have questions about financing in a condominium complex, email us at info@SacramentoCondos.com and we’ll get the up to date information from one of our lender partners.

Bruce Slaton

SacramentoCondos.com