Re: co-housing unacceptable to Fannie Mae?!?
From: John Beutler (jabeutlercomcast.net)
Date: Tue, 24 Apr 2012 19:48:43 -0700 (PDT)
It took 8 months, but I just completed a refi as part of my divorce. An appraiser said he didn't think the benefits justified the monthly fee, but cohousing wasn't an issue for them. But then we don't have a right of first refusal or a specific work requirement. The inderwriters, on the other hand were so risk averse that they had my separation agreement revised to satisfy themselves. But it finally closed.

JAB
Liberty Village Cohousing
Frederick, MD

On 4/24/2012 10:20 PM, Lyle Scheer wrote:
On 4/24/12 1:21 PM, Sharon Villines wrote:
On 24 Apr 2012, at 3:18 PM, Lyle Scheer wrote:

So, yeah... we thought we had the bases covered, but it appears that
even this is not good enough... Honestly, I think this underwriter
balked at just the words "co-housing" and "right of first refusal" and
didn't read anything else.
I think it sounds like it. Since all the paperwork and fact checking
has increased the person just doesn't want to bother.


As this develops... I'm trying to suss out from my broker some of the
questions raised by others on this list, such as what exactly are the
Fannie Mae requirements as well as the "bother" speculation.

Talking to my broker, he told me that the appraisers (which was the
first trouble) are paid by appraisal, so they are the ones to usually
not want to bother.  We found an appraiser, but this is the loan
underwriter who is giving trouble right now, and my broker said that
they're paid by the hour, so more work shouldn't be a bad thing.

He also told me that Fannie Mae makes the lenders buy back mortgages
that they might initially purchase but then decide that they are not
valid, and that it only takes a couple of these before a particular
lender starts avoiding those types of issues.  If I believe what he is
saying, and based on the experiences of others on this list, that would
imply that as time goes on more and more of these lenders will be on the
lookout for these sorts of red flags (the word "co-housing"!?) and loans
will continue to be harder to get.

At this point, as much as I have been trying to talk the broker into the
"this is not so bad" on the right of first refusal I posted earlier
(mainly about it only being 30 days)... he basically told me the clause
itself is a deal breaker.

More shocking: the underwriter emailed to the broker a copy of my
community's ic.org entry !?!, and pointed out that the "expected 10
hours of labor per household" is also a deal breaker.... literally
looking for any excuse not to do this loan.  Since I'm an editor for our
ic.org entry (Ashland Community Cohousing), I immediately removed that
expectation listing.

It really makes you wonder in these days... it feels like co-housing is
the homosexual in the financial closet and we are very clearly being
discriminated against... hopefully that's not offensive to anyone... I
suppose if anything it's not nearly as bad as what gay people have
endured.  It also reminds me how I keep hearing that employers are
looking at facebook profiles for negatives.... the lender looked at our
ic.org profile!  Good grief!  Do we really have to guard our co-housing
privacy that much that we can't put out on the web things like labor
expectations or be threatened with no loans?

If it weren't for the fact that I need to get the loan through before
May 14th or other bad things happen (personal situation), this might not
be that big of a deal... just shop around.

However.... shopping around, I'm also getting told I can't transfer my
appraisal and that each lender I go to needs to order an appraisal due
to new financial regulations, so I'm placing a $400 bet that no red
flags will show up every time I go somewhere to try to get a loan.  My
current broker says I should disclose the co-housing and right of first
refusal issues to new lenders when I go there, but that seems like I'm
just asking for trouble.

Yikes.

I guess the relevant question for the list would be, has anyone done
this process by actively disclosing the uniqueness's of your community
and had a lender not blink? Within the past year?

I worry that what I hear is that people just shop around until they find
someone who *is* willing.  Now, if they're not disclosing the issue, the
willing entity may just not have seen the red flag.  If the lenders are
getting better at seeing the red flags, this is just getting harder for
all of us.

- Lyle
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