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Is there a conventional lender that will do a condo with litigation pending? Anne James Reliance Mortgage Service Inc

by annermsinc362 from North Hollywood, California. Nov 3rd 2016 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,734 contributions

No.. Conventional guidelines do not allow condo projects currently involved with litigation.. Let me explain exactly what "Conventional" means in regards to mortgage lending.. Freddie Mac and Fannie Mae are clearing houses for mortgage loans.. they buy them in bulk from individual lenders and then put them in blocks and offer investors "Stock" against these blocks... This is how lenders keep the money moving.. they issue a loan, charge fees to do the loan, and make a profit when it's sold off.. they get the funds they lent back and do it again.. but in order for Freddie/Fannie to purchase the loan, it must meet minimum lending guidelines (Conventional Guidelines).. if it doesn't, then if the lender does issue a loan against a property that does not meet these boiler plate guidelines, then that lender will need to carry that loan on their own books, or sell it off at a large discount.. So, in reality, there is no such thing as a "conventional" lender that will do a condo with litigation.. it's outside of conventional guidelines.. What you are looking for is a "Portfolio" or private lender willing to do this project.. and my guess is that you wont find anyone with reasonable terms.. Since inherently, condo's are a greater risk than single family homes, so when private money is lent on these types of properties, the terms are usually pretty nasty.. much higher interest rates, higher fees, and much lower loan to values.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Nov 3rd 2016
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Larry Gray (lgray_312_247)
#556 ranked lender in California - 1,126 contributions

Anne, it is possible to get a loan with 20% down payment, depending not a hard money loan for a condo with litigation pending, otherwise William has answered the question clearly. You can email me via my profile if you want to know of a wholesale lender who would provide such a loan. I should mention there may be a few conventional lenders out there who would evaluate the litigation before rejecting the loan. I do know a former associate got one done on a townhome style condo in Dublin, CA a couple of years ago. It seems that litigation had been going on "forever."

Nov 4th 2016
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Larry Gray (lgray_312_247)
#556 ranked lender in California - 1,126 contributions

"...depending not on a hard money loan." It does pay to edit before hitting the submit button!

Nov 4th 2016
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Ok, if the condo is NOT construction related, two of my wholesale lenders will review it. Then, no higher interest rate if it's deemed 'a saleable loan' to Fannie or Freddie.

Nov 4th 2016
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Dan Paladin (dpaladin)
#1 ranked lender in California - 409 contributions

I do have an investor that will lend on any type of litigation that is pending. Investor does require 20% down and rates are reasonable though higher than standard Fannie or Freddie. (Not private money)...they actually specialize in this type of financing. This would be a brokered product for me vs "banked".

Nov 4th 2016
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,734 contributions

Just a quick note to consider.. If your borrower is putting 20% down or more, then per lending guidelines, only a limited review condo questionnaire is required.. however even on the "limited review" questionnaire, they ask the question if there is any pending litigation.. so, again, i'm pretty sure that you wont find any conventional loan products which allow your project.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Nov 4th 2016
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