Every time we submit a loan to our investors, we need to provide a homeowners association checklist. This is completed by the management company or the President of the Board. The checklist asks questions such as if the units are being used as a primary, secondary or investment property along with other questions about the association’s financial strength and property details. From the Fannie Mae guideline book, “Fannie Mae considers projects with any of the following characteristics to be hotel type projects and therefore, ineligible”:

• Central telephone system
• room service;
• units that do not contain full-sized kitchen appliances;
• daily cleaning service
• advertising of rental rates
• registration service
• restrictions on interior decorating
• franchise agreements
• central key systems
• location of the project in a resort are
• project converted from a hotel.

We have encountered these issues as well:

• Too many units are rented versus primary or second homes
• More than 15% of the units past due on their HOA dues
• Nightly rental units advertised on line

Please call us with any questions on Steamboat Springs condos.

Holly Rogers,  970.875.1636

Kathryn Pedersen ,  970.875.1609

The post Financing Steamboat Condos appeared first on Steamboat Ski Condos.

The reality of today’s market is that the condominium development has to get approved before the condominium buyer is approved.  And no matter how high a borrower’s credit score is or how many assets a borrower has, the fact is that some Steamboat Springs condo developments are not able to be financed in today’s lending environment.

The good news is that banks vary as to what developments they will finance. All have different underwriting rules, so some Steamboat condo developments may be allowed with certain lenders.

Here are three reasons Steamboat condominium developments may be turned down:

• Occupancy Rate – this is the percentage of owners who actually live in the complex vs. investors who rent their condos out.   Typically, lenders want to see 51% or more owner occupants.
• HOA Delinquency Rate– the percentage of overall owners who are delinquent on their HOA dues.  Anything over 15% delinquency is a red flag to the lender.
• Litigation– is the development involved in litigation?  If it is, it’s going to be very hard to finance.
• Time Shares—Some Steamboat developments have a few condos that have been split into fractions or timeshares.  Others allow timeshares in their governing docs, even though none of the condos have been split into fractions.  Anything that has to do with the property and says “timeshare” or “fractional”  is not good.

(These Steamboat condo developments all had sales in January where the buyer financed the condo:  Fish Creek Hill, Walton Village Condo, Wildhorse Meadows – First Tracks, Storm Watch @ Steamboat,  Sunray Meadows, and Pines at Ore House.)

A few ways to get around the lending issue:

• Use a local Steamboat lender.  Our lenders generally know if the condo might have any issues.  If they can’t do a loan, they will refer someone who can.
• Get a HELOC on your primary residence.
• Use a Steamboat bank who will make a portfolio loan.
• Consider owner financing.
• Pay cash.

Interested in purchasing a Steamboat condo or seeing if financing is available?  Please call 970-846-8284 or contact us with your questions.

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Government-backed loans currently make up over 90% of mortgages, so if the condo development doesn’t fit into the current Fannie Mae and Freddie Mac guidelines, conventional loans can be difficult to find. In Steamboat, things like front desks, nightly rentals, and timeshare language in the covenants are all red flags for conventional financing.

These challenges to financing resort properties are being noticed and may start to change.

Sarah Thorsteinson, the Steamboat Springs Board of Realtors’ Government Affairs Director, has this to say about financing issues in resort real estate markets like Steamboat Springs’:

Condo Financing Issue Finally Making Waves In Washington:
For years, the Colorado resort areas have clambered to NAR that condo financing rules were killing the local markets, and that the FHA, Fannie Mae and Freddie Mac rules needed to be addressed. It was clear for the first time this year in Washington that the condo financing issue is beginning to stick. Congressman Polis talked about his bill to address workforce housing condo rules, NAR had talking points on FHA condo rules that need to be addressed from a regulatory perspective and there is a letter being circulated by Members of Congress telling the FHA to take action. As of this morning, NAR reached out to the resort areas and offered to request a waiver or exemption for resort areas. The Glenwood, Steamboat, Summit and Vail Boards will be working with NAR to draft and request the waiver for resort areas. Due to the Washington political climate, it is possible that
no changes will be made this year, but it is inevitable that the issue will be addressed in GSE and housing reform next year.

For more information on what Steamboat properties are easier to finance, please call us at 970-846-8284.

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