10% FNMA Rule?

Had a four-unit coop, back when the buyers banks questionnaires always asked if any of the owners owned more than twenty percent of the shares, and I always answered yes, of course, it is a four unit coop so all four owners own more than twenty percent of the shares, by definition.  Loans always went through.  that was because in obtaining financing commitments, buyers had to tell the banks that it was a four unit coop, so only banks comfortable with the percentages would extend loans in the building.  seems to me that if sellers were upfront about the percentage ownership that exists in the building, then mortgage brokers can get people loans from portfolio lenders, ones who keep thei loans rather than sell them to fannie and freddie, and these banks would know about the percentages that exist in the building before wextending commitment letters.  Of course, that is a way to avoid this problem going forward, but does not help the current ones in contract to close.  but if should be fairly easy for buyers to get new loan commitments from portfolio lenders from their mortgage brokers, once the original bank has declined to fund the loan.

brokelin

in Mortgage 12 years and 1 month ago

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ejalbk | 12 years and 1 month ago

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I manage a 16 unit co-op. Several of the owners have their units under contract for over two months because an issue has come up on each one with FNMA (or technically the banks that intend to sell the mortgages to FNMA). Apparently, FNMA has decided to blacklist any building where a non-Sponsor owns more than 10% of the units. At this particular building, there is an individual that owns two units (i.e., more than 10% of the units). Banks and brokers have been working on this as that owner is one of the owners under contract which will put him (and the co-op) back under 10% with the sale of a unit (but it’s a bit of a Catch 22 at the moment as nobody can close until he sells and he’s having trouble for the same reason). As tough as this is, I also manage a co-op with 8 units. Basic math reveals that in that co-op, every unit accounts for more than 10% of the units! Nobody has tried to sell under this 10% guideline yet so I’m trying to figure out if FNMA’s position will be completely rigid, which would make it impossible for any co-op with less than 10 units to qualify for a FNMA mortgage. Has anyone in a co-op with less than 10 units gotten a mortgage recently? If so, was non-FNMA financing involved? Or, if there are any mortgage brokers out there that are familiar with this situation, I’d like to hear your take on it. Thank you.

wiliumamith | 12 years and 1 month ago

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How to handle such issues ? I really want to know more about it . http://www.hypedc.com/converse

cm | 12 years and 1 month ago

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I’m the president of a 12 unit coop where one shareholder owns 2 units. Shareholders have done a number of refi’s in the past year and this hasn’t been an issue. For whatever reason most of the loans have been originated by Chase. By far Wells Fargo has been the most difficult to deal with but never raised the 10% issue. You may want to check with Adam Dahill of WCS lending – he’s referenced many places on this site.

cm | 12 years and 1 month ago

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I think we did 2 in the past year with another 2 pending and preparing to close. Those regs have been on the books forever it’s just that they’re getting more scrutiny now. There are lenders who are willing and able to close however particularly the smaller community banks that will keep the loans on their books.