In a previous column I wrote, published in October 2011, I offered a few tips for condo financing.

I shared with you one of the most important things to understand when attempting to obtain financing for a condominium is an HOA Certification, or Homeowner(s) Association Certification. Without a completely acceptable HOA Certification by a lender, your condo loan is probably not going to get approved.

To review, an HOA certification is an extensive questionnaire and a way for your lender to interview the association that manages your condo project.

It typically covers all the title, ownership, legal, financial and insurance aspects of the condo project in full detail. Any special assessment information and sales progress of the units are evaluated as well.

However, in the event that the results of the HOA certification are not acceptable to your lender, it doesn’t mean all hope for financing is lost.

Over the past couple of years, as more time has elapsed post-mortgage market meltdown, there’s been an increased number of financing sources made available for “non-warrantable” condo loans.

While these loans are certainly not new in the lending world, they are simply higher risk and less desirable investments for mortgage bankers when the real estate market isn’t healthy.

The difference between a “warrantable” and “non-warrantable” condo loan can be summed up by stating that if the condo project meets certain standards, then it’s likely to be eligible for sale to the Federal Housing Administration, Department of Veterans Affairs, Fannie Mae or Freddie Mac.

If it doesn’t, it would be considered “non-warrantable” and your loan would need to be placed with a portfolio or balance sheet lender, one who keeps the loan on their books instead.

For example, your lender could have a “non-warrantable” financing source that’s willing to take on a condo project with pending litigation or with a single entity, individual or group who owns up to 20 percent of the total units in the project.

Even if the project has up to 25 percent of its unit owners who are more than 30 days delinquent on their dues, that might not be a problem. Neither would any condo conversions or condotels or commercially influenced projects if matched up with the right “non-warrantable” lender.

Of course, each lender will have different underwriting parameters, but you should likely notice they are all somewhat similar.

In regards to their lending terms, you might find minimum loan amounts as low as $100,000 and down-payments as little as 20 percent for owner-occupied or second-home financing.

If you can secure a loan on a “non-warrantable” condo under an investment property classification and even take cash-out of a primary residence or second home.

Most “non-warrantable” condo lenders should offer you a selection of fixed and adjustable rate products, along with no pre-payment penalties too.

If you currently own a “non-warrantable” condo or if you are thinking about purchasing one in the future, contact your local lender to find out further information on how this unique financing option may help you.

Chris Salese can be reached at or (707) 363-4439. He is a licensed California mortgage banker (NMLS 254469/1850 CA BRE 01377933/01215943) and equal housing lender.


Load comments