San Lino (Venice: for sale, real estate, foreclosure)

[lynne4t]

Anyone have any idea why 15 condos in San Lino in Venice just went on the market? Anyone know anything about the development? CDW?

[SoFLGal]

Looks like they are all non conforming and for sale by Waterford-the builder. Not sure why they all went on at the same time though.

See remarks below:
Due to the fact that San Lino is a non-conforming condominium, please be advised that obtaining any type of long-term mortgage with conventional financing will not be possible; however, short-term, ARM financing may be available to qualified buyers on a case by case basis through Florida Shores Bank. In addition, buyers may seek longer term financing through a private portfolio lender of their choice

[Col.W.Deering]

Thanks for the explaination SoFLGal. I wonder if you could explain what a non-conforming condo is, and why it can't be bought using a regular mortgage?

[SoFLGal]

Thanks Col. There are many ways a property can be non conforming. One of the most common around here are the beach properties that have "space" under the house. Often home owners turn that portion into a bedroom/bathroom. This space could be non conforming.

Another example of this is if the property becomes more than 50% damaged, it has to be rebuilt to the new zoning requirements. Thus, what is a 5-unit right now may be limited to a 3-unit standard if it has to be rebuilt.

Neither of these would apply to the condos. So, my guess is that it has some other kind of zoning issue.

I'm assuming that whatever the zoning issue is it can't be remedied so no bank would want to finance with this type of encumbrance.

I put in a call to the list agent to get the scoop. They're all listed by the same fellow, who I'm assuming works for the builder. I'll update you when he calls back.

[lynne4t]

When I posted this, I KNEW you'd be the one to provide the answer, Shannon. Thanks!

[bbronston]

Just thinking, it could be that they have too many units with renters, too little in reserve funds, too many units in foreclosure in the development, too much money or too many units that are past due on condo fees....all of these things can affect the willingness of a lender to loan.

[SoFLGal]

I played phone tag with the list agent for the first day and then spoke with him. He was supposed to email me an explanation on Monday as to the problems. Nothing received yet after several calls.

In a nutshell it has to do with the site plan. The developer was approved to build X amount of buildings and did not. There were several building that were not completed and therefore the site cannot be properly permitted and would not qualify for financing. He also said that there are to many condos rented out to qualify for financing.

[lynne4t]

On that note.... I know that when one is financing a condo, there is a degree of protection as the bank will look into all the possible negatives of the association and not lend if they don't meet their guidelines. We would be paying cash. Does this mean we would have to find all this information ourselves? Can we? Do real estate agents generally have access to the pertinant info and will they generally help you with it?

[bbronston]

You are entitled to receive condominium and HOA (if applicable) disclosures, financial info, questions and answers regarding the association's condition, and all the condo docs including the rules, and you have 15 days to review them (if it is a new condo) or 3 days for a resale. During that time, you can have the info reviewed by a professional (i.e. CPA, attorney,etc.) and you can back out at any point during that review period. Plus, you can have an inspection done by a home inspector, too. A smart real estate agent will request these things for you but will not offer opinions regarding the financial soundness or suitability to your needs unless they are also a CPA or attorney. We, as agents, are prohibited from offering opinions or making statements that are beyond the scope of our expertise due to all the liability associated with doing so.

[SoFLGal]

Here's the new response from the agent:

Tightened Guidelines for Condo Financing

In November 2009, Fannie Mae issued additional procedures for lenders to certify when lending to condominium buyers based on the financial vitality of condominium projects focusing most of its attention on their condominium association. Freddie Mac has adopted similar guidelines. Under the tougher policy requirements for all condominium purchasers, lenders must verify and warrant to Fannie Mae that:

• The condominium association maintains an “adequate” budget; TRUE, BUT DOESN’T MATTER DUE TO DUE TO INCOMPLETENESS OF PROJECT (see below)
• The association’s budget allocates at least 10% of its annual revenue for funding replacement reserves for capital expenditures and deferred maintenance of the condominium project; TRUE, BUT DOESN’T MATTER DUE TO BELOW
• The condominium association holds funds equaling the deductible under the master insurance policy; TRUE, BUT DOESN’T MATTER DUE TO BELOW
• No more than 15% of the association’s fees are delinquent by more than one month. THIS 85% CURRENT RATE IS A KILLER FOR MOST CONDOS

In addition to the requirements set forth above, for established condominium projects, loan officers must also certify that the project (1) is complete without additional phasing; SAN LINO IS NOT COMPLETE, ONLY PHASE I HAS BEEN DONE, PHASE II HAS NOT, the remaining conditions are irrelevant because of this (2) has had 51% of its units conveyed to owner-occupied or second home purchasers with no one owner owning more than 10% of all units; (3) has no more than 20% of the total square footage used for non-residential purposes; and (4) had its legal documentation drafted by a qualified attorney in compliance with state law.