Thursday, June 02, 2005

Warrantable vs. Unwarrantable Lofts

Watch out!

I've spoken to so many people lately that think that they qualify for any lending on any property just because they have a good credit score, or Bill Gates will be co-signing for them.

Many of the loft developments in the city are considered "Non-Warrantable" condominiums. In english, that means that the loan will not be able to be sold by your lender on the secondary market as a conforming "Fannie Mae or Freddie Mac" loan.

Broken down further, that means that you may have trouble getting financing for that fantastic new loft IF YOU DON"T HAVE THE RIGHT LENDER.

UPDATE:  We work with lots of great lenders.  Unfortunately, since this post was originally written, banks and other investors have stopped lending their own money and loans for non-warrantable lofts are much more difficult to come by. Contact US!  Its heartbreaking when a client thinks they can find the needle in the haystack and tries, only to find a mortgage person that's trying to get their "foot in the door" by telling them that they can probably do that type of loan, only to make an offer, pay for an inspector and appraisal, then be told "NO".  I've heard too many times that people use their own resources only to find out that the bank isn't set up to write loans on Non-Warrantable Condos.



Anonymous said...

I was locked in to close on my loft and found out two weeks before closing that the bank I was working with couldn't do this type of loan. It would have been nice if they would have told me that up front!!!!

Anonymous said...

What exactly does unwarrantable mean?? Is it a bad thing to buy unwarrantable??

Chris Grus said...

A non-warrantable loft is not a bad thing at all. Any condominium or loft can be non-warrantable if the entire project or building does not meet certain Fannie Mae secondary lending guidelines. In layman's terms, these guidelines are set up so that all the retail lenders, banks, mortgage companies have a guideline on what types of loans are the most valued to the secondary mortgage lender (banks that loan money mainly to other banks).

Things that can make a condo or loft development non-warrantable are a high ratio of non-owner occupied units, a large number of vacant units, inadequate pre-sales, or maybe just not having completed the right paperwork by the association.

In new construction situations (which is prevelent in the loft district in St. Louis) it can be common to find many non-warrantable units. Your lender just must be able to offer a loan product for non-warrantable condos and not every bank has that ability. Finding a mortgage lender that frequently works downtown or with condos can generally resolve this matter.

Unknown said...

I am looking for a lender that will do those type of loans?