The Condo “Naughty List” – Excerpts Shared from Article

I read this article HERE, by Christian Leonard.

Hello – thank you for tuning into today’s blog post. I am sharing excerpts from the San Francisco Chronicle Article about the condo naughty list.

As if getting a home in the Bay Area wasn’t hard enough, now we have another layer to add to it – a condo naughty list.

Due to the condo collapse in Florida and balcony failure in Berkeley, lenders are taking a step back in caution regarding how these condo complex and their Home Owners Associations are handling the maintenance of their buildings. Some are not handling it well. As a result, some complexes have been red-flagged and deemed unlendable until reports come in stating the opposite.

“More than 700 California condominium complexes are flagged in Fannie Mae’s database as being ‘unavailable,’ meaning the company won’t purchase loans for units there, according to data provided by condo law firm Alcock Marcus. The number of affected condos has skyrocketed in the past few years.

The impact of being on the list could be severe. A bank often won’t lend money for a condo that’s on that list, said Kevin Casey, a Bay Area loan officer with Guarantee Mortgage. That means the buyer has to either get a non-qualified mortgage, which is a riskier type of loan that comes with higher interest rates, or back out of the deal entirely.”

This is terrible news for first-time buyers or price-sensitive clients, where condo or townhome purchases are the first step into getting into the Real Estate market. Especially here in the Bay Area.

“Exactly which condo buildings are blacklisted is unclear — Allcock Marcus declined to provide the list itself. Only lenders are able to access the database, and both buyers and sellers may not know that a condo is flagged until they’ve already made a deal. But the Mercury News reported that about 168 Bay Area complexes are on the list, including 21 in San Francisco. ” Thankfully, knowing this information now, we’ll have our lenders take a look at that list before we proceed.

“Condo owners and sellers were already struggling to find insurance, with providers either leaving the state or significantly raising rates. Those insurance woes have also resulted in the Bay Area having some of the highest HOA fees in the country. And in the Walnut Creek retirement community of Rossmoor, most buyers have to pay in cash after Fannie and Freddie announced they would no longer back mortgages there unless it was funded for a complete loss. Rossmoor is one of 35 flagged condo complexes in Walnut Creek, according to the Mercury News.

Casey, the Guarantee Mortgage agent, said buyers who are considering bidding on a condo should make sure it’s in a well-run association, as that can determine how much time they spend navigating issues later in the deal.

“You’re buying two things,” Casey said. “You’re buying what’s between the walls, and you’re buying the management company. So you have to spend … a good amount of time looking at that HOA.””

That is so well said, and why it is so important that buyers take the time to actually read the Home Owners Association Documents but even that isn’t enough to know the structural integrity of the building. This will require each complex to do its due diligence, employ the correct inspectors to clear any red flags if a complex is flagged. This will require the members of the association to approve these expenses, and I hope they do – and sooner rather than later – as this list will impact the value and desirability of these units. Which in turn will impact the current owners there and affect their ability to sell should the time come to move.

Not the news I want to hear as a Realtor – but also the news I want to hear because the safety of my clients and friends matters.

Thank you for reading today’s post, and know The Caton Team is here to help – reach out with your Real Estate questions or concerns.

Got Questions? The Caton Team is here to help.

We love what we do and would love to help you navigate your sale or purchase of Residential Real Estate. Please reach out for a personal consultation. Please enjoy our free resources below and get to know our team from our TESTIMONIALS.

Effective. Efficient. Responsive. The Caton Team 🏡

How Can The Caton Team Help You?

Get exclusive inside access when you follow us on Facebook & Instagram

Got Real Estate Questions? The Caton Team is here to help.

We strive to be more than just Realtors – we are also your home resource. If you have any real estate questions, concerns, need a referral, or some guidance – we are here for you. Contact us at your convenience – we are but a call, text, or click away!

The Caton Team believes, in order to be successful in the San Francisco | Peninsula | Bay Area | Silicon Valley Real Estate Market, we have to think and act differently. We do this by positioning our clients in the strongest light, representing them with the utmost integrity, while strategically maneuvering through negotiations and contracts. Together we make dreams come true.

A mother and daughter-in-law team with over 35 years of combined local Real Estate experience and knowledge – wouldn’t you like The Caton Team to represent you? Let us know how we can be of service. Contact us any time.

The Caton Team – Susan & Sabrina
A Family of Realtors
Effective. Efficient. Responsive.
What can we do for you?