Mortgage Refinance Was Declined

[kakashi]

My question involves a condominium located in the State of: NY

I obtained a GFE, went through the application process, and was approved for a new/refinanced mortgage based on my excellent credit, etc. A few days later, however, I was declined based on what they said was 'poor' financial status of the condominium building (62% are investor owned, 21% owned by 1 entity, 17% delinquint). Mortgage company said that Freddie Mac would not issue a waiver.

Questions are:
Is there anything I can do to get this application approved by this mortgage company (e.g. talk with my building's management company)?

If not, is there any way I can get my application money ($500) back from the mortgage company since it was the building and not me at fault?

thanks for the much needed advice

[SChinFChin]

My question involves a condominium located in the State of: NY

I obtained a GFE, went through the application process, and was approved for a new/refinanced mortgage based on my excellent credit, etc. A few days later, however, I was declined based on what they said was 'poor' financial status of the condominium building (62% are investor owned, 21% owned by 1 entity, 17% delinquint). Mortgage company said that Freddie Mac would not issue a waiver.

Questions are:
Is there anything I can do to get this application approved by this mortgage company (e.g. talk with my building's management company)?

If not, is there any way I can get my application money ($500) back from the mortgage company since it was the building and not me at fault?

thanks for the much needed advice

I am very doubtful, and as a real estate investor, I also got stuck with refi's that I put applications in for, and they failed to come through with their promises. In one case, I told them I put in quite a bit of improvements, I'm trying to lower my rates, and pull out some money I put in at the same time. They verbally said they see no problem.

This was years ago before banks went crazy handing out money, my property was appraised at $275K, and I couldn't see any problems getting a $175K mortgage to replace a $125K one, with a 3.5% cut in interest rates, so i'm only paying a slight bit more, and I'll be whole if I increase my rents a bit. They came back, told me they could offer me no more than $135K, has they have policies against "cash out refies".

So I said, why didn't you tell me that to begin with. I checked with an attorney, and I was told that since they ordered credit reports, did appraisals, did the processing, if we go to court, it's my word against their's, I cannot prevail.

I don't know if you live there, or if this is an investment. But it's been a well known fact for many years that Freddie Mack would not touch any condo's with OVER 50% investors, and in particular if one investor owns a a large percentage of units, since they lost their shirts on these types of condos.

I owned some rental condos in Springfield MA, and at first I was upset the HOA set a 25% limit on investor condos, and subsequently tried to lower it to 15%. Those condos at better times went for $125K, though I picked them up at $40K at REO auctions.

One of the main reasons cited for the HOA being strict is if you start with 25% investor units, then they grant special permission to units owners who can't sell their units to rent the place out, or owners who had to temporarily relocate and come back to rent out, when you add all these factors up, very easily can the percentage of "landlord owned" units go over 50%.

As this topic's been well known for a number of years, and if I was the mortgage company, I'd be shocked to hear someone refi-ing is ignorant of it. While you can accuse them of the same thing, I would have to say that banks usually check the credit reports, appraisals, your employment history first, before seeing how many investor units are in the building, so it should be something you should alert them to first.

Some time later, I was looking to buy more investor condo units, and my relative up there asked me why I am looking at $40K condos, where there were some in the neighborhood going for $5,000 to $8,000. I thought he heard it wrong, maybe they were small $5,000 down payments.

I checked, and indeed it was selling for $5,000. What happened was it was some conversion, the developers failed to sell a majority of units, so it turned out more than half were investor owned, and when some original owners tried to sell, they had a hard time due to buyers failing to get a mortgage. Finally the developer, and many owners stopped paying monthly fees, and the place went to the dogs.

What happened in my county not long ago was an entire condo complex was condemned due to the inability of the HOA collecting fees due to the high number of investor units, and they were unable to do repairs to cure code violations.

Usually, if you refi in these case, you look for banks who'll take the mortgage into their own portfolios, though I can't see who will do it with so many red flags.