Cohousing-L Mailing List: Re: Mortgage lenders and cohousing

[Lyle Scheer (wonko]

On 8/27/12 6:14 AM, Lautner, Patricia wrote:
> Is anyone else having problems with lenders?  We found out recently that 
> Chase has put Cohousing on a 'No Go' list and won't provide financing.  We 
> recently had a sale where the buyers were turned down because the word 
> Cohousing in our name apparently triggered what is called  a "Long Form 
> Review" of our condo docs.  Even though we believe we have very standard - 
> vanilla State of MA condo docs, we do have a Right of First Refusal clause, a 
> Transfer Fee clause, and the guest suites are mentioned.  So far three 
> different lenders site one of these mentioned clauses as reason for denying 
> the mortgage (on a high income, dual income, young couple putting more than 
> 25% down!)
>
> I'm on the Board at JPCohousing and we're considering our options.  Please 
> let me know if you've had any problem like this and what your community is 
> doing about it.
>
Yes.  I recently had a terrible time refinancing, but managed to succeed
with this particular underwriter (and got a letter last week saying my
loan has been sold to Fannie Mae), basically by burying the word
"cohousing" as well as removing our right of first refusal clause,
removing our web site and putting up a fake one under an older name for
our community that did not contain the word cohousing.

I did some investigation and the lawyer who helped us remove the clause
told me that recently a bunch of "reforms" were put in place for the
mortgage industry in order to prevent a duplicate of the crisis that
were very poorly thought out.  One of them is to disallow any form of
first right of refusal.  Another one mentioned by the lawyer was one
that said that no loan could be made to a planned unit development where
a single owner could own more than 10% of that development, which, she
informed me, plays hell with any HOAs that have less than 10 units.

She seemed to believe that mostly everyone agreed that these reforms
sucked, and needed to be changed, and believed that they eventually
would get loosened up again, but apparently the current climate is very
difficult.

This is something that is recent within the past six months. 
Experiences previous to this may not apply.

I can't really put our names in this post... it would cause it to get
google indexed and potentially cause trouble for the next owner in our
community that tries to finance.

- Lyle