If a selection of condos does not appear above, its because as of today there are no available listings that are eligible for Homepath financing, check back daily or contact our office to set up a personalized search for you. Because some of the best sought after condominium complexes currently do not have financing available, active listings eligible for Homepath financing tend to move quickly.

We can show you any of these condominiums once we determine your pre approval status. We work with a wide array of qualified and reputable lenders here in Sacramento and would be happy to refer one to you today, just email us at info@SacramentoCondos.com .

If a selection of condos does not appear above, its because as of today there are no available listings that are eligible for Homepath financing, check back daily or contact our office to set up a personalized search for you.  Because some of the best sought after condominium complexes currently do not have financing available, active listings eligible for Homepath financing tend to move quickly.

We can show you any of these condominiums once we determine your pre approval status.  We work with a wide array of qualified and reputable lenders here in Sacramento and would be happy to refer one to you today, just email us at info@SacramentoCondos.com.

A. Fannie Mae and Freddie Mac have new rules that apply to anyone who is buying a condominium. It requires additional coverage over what associations commonly provide.

The insurance agent looks to the CC&Rs for guidance as that tells what coverage the association will provide. This is not always true but commonly the insurance policy may just cover the exterior structural components, walls and roof. This is “bare walls” coverage. In the event of a total loss of your home due to fire, the association’s policy would rebuild the structure but leave you with an empty shell.
It would be up to you to pay for the plumbing fixtures, all the cabinets, interior doors, kitchen appliances, furnace, light fixtures, wall coverings, and carpet or wood or stone flooring, and everything in the bathrooms.

In addition, there may have been improvements beyond what the developer provided when your unit was built. These are known as “improvements and betterments” that are additions, remodel improvements and other things that people have done to their units to make them nicer.

Fannie Mae and Freddie Mac have finally realized this gap in coverage and have moved to close it. The new requirement is that if the HOA’s master policy doesn’t provide sufficient coverage, the borrower must provide what is known as an HO-6 policy.

That’s OK because you would want that coverage too. Note that there are two levels of coverage. The first would just include rebuilding to “original specifications,” that is the way the builder built it. Coverage for the “improvements and betterments” has to be included too.
Here’s the stupid part. Fannie and Freddie require coverage equal to 20% of the appraised value of the home. It should have been written to include 20% of the value of the above-ground improvements. You have to pay for insuring 20% of the value of the land that is included in the total appraised value. Even worse, the cost of adding interior structure coverage to your personal property policy is very expensive, as you found out.

The best solution is almost surely to have the HOA increase its coverage to meet the new requirement. That will likely require a change to your CC&Rs, something you cannot initiate until you are an owner. In the meantime, they gave you the CC&Rs so see what it says. Then get your HOA’s master insurance policy and find out exactly what it covers. It will probably not be spelled out so you will probably have to call the HOA’s insurance agent to find out the specific coverage.
Then sit down with your insurance agent to make sure your personal property assures that you are adequately insured and that you meet this new requirement.

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

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

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