Senor Schmutzig
Footballguy
I am in the process of purchasing a condo unit in Florida with my parents. We will both be on the title/deed. They will be living in it year round as it will be their primary residence.
We made an offer, it was accepted and are now going through the final stages of the mortgage process. Due to the unit being part of the condominium association, the HOA requires that any potential buyers fill out an application and get approved by the board prior to the purchase being finalized. We asked for, received and reviewed a copy of the HOA bylaws (147 pages!!!) to ensure there weren't any dealbreakers.
There were a variety of requirements for the buyer that were within the application, but none of them were any issues for either me or my parents e.g. minimum credit score of 650 (ours are both 780+), annual income that is more than 3x the combined total of the annual assessment + mortgage, (I'm a FBG, so really?) not ever being convicted of a felony, etc.
Yesterday, my father received an e-mail from the HOA Board to express their concern that we are only putting down 10% and will have a 90% Loan to Value ratio. They then threw this cureveball into the mix; something that is NOT included in the bylaws or the application:
The Board is uncomfortable with the financial structure of your purchase due to the fact that you are only putting 10% down. We need to protect the Association against financial issues occurring with any future unit owners. As part of our approval process, we cap the mortgage-to-value ratio at 70% to ensure that owners have the appropriate level of equity in their condo to sustain a decline in real estate values and/or avoid delinquency in fees or assessments.
Besides the fact that in this financial environment with historically low mortgage rates, it doesn't make a whole lot of sense to provide MORE than 10% due to the fact that I can get a bank to give me the balance at a 2.5% APR (CHEAP MONEY!!!), how can they just arbitrarily introduce this requirement if it has never been brought up before nor is it in any written documentation? If they do end up denying us the ability to purchase the unit, do we have legal standing to appeal that decision?
And then there's the issue of correlating the equity in the property with the ability for someone to be able to address any increase in fees or assessments but that's another conversation....
We made an offer, it was accepted and are now going through the final stages of the mortgage process. Due to the unit being part of the condominium association, the HOA requires that any potential buyers fill out an application and get approved by the board prior to the purchase being finalized. We asked for, received and reviewed a copy of the HOA bylaws (147 pages!!!) to ensure there weren't any dealbreakers.
There were a variety of requirements for the buyer that were within the application, but none of them were any issues for either me or my parents e.g. minimum credit score of 650 (ours are both 780+), annual income that is more than 3x the combined total of the annual assessment + mortgage, (I'm a FBG, so really?) not ever being convicted of a felony, etc.
Yesterday, my father received an e-mail from the HOA Board to express their concern that we are only putting down 10% and will have a 90% Loan to Value ratio. They then threw this cureveball into the mix; something that is NOT included in the bylaws or the application:
The Board is uncomfortable with the financial structure of your purchase due to the fact that you are only putting 10% down. We need to protect the Association against financial issues occurring with any future unit owners. As part of our approval process, we cap the mortgage-to-value ratio at 70% to ensure that owners have the appropriate level of equity in their condo to sustain a decline in real estate values and/or avoid delinquency in fees or assessments.
Besides the fact that in this financial environment with historically low mortgage rates, it doesn't make a whole lot of sense to provide MORE than 10% due to the fact that I can get a bank to give me the balance at a 2.5% APR (CHEAP MONEY!!!), how can they just arbitrarily introduce this requirement if it has never been brought up before nor is it in any written documentation? If they do end up denying us the ability to purchase the unit, do we have legal standing to appeal that decision?
And then there's the issue of correlating the equity in the property with the ability for someone to be able to address any increase in fees or assessments but that's another conversation....
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