Non-Warrantable / Litigation Financing
Jeff’s take – Many condo complexes in San Diego are non-warrantable by either Fannie Mae, Freddie Mac, VA, or FHA. NGG will know which ones are or aren’t. With investment property financing, if the owner-occupancy is less than 50%, those are considered non-warrantable too. Not many Lenders do non-warrantable financing. We have a preferred relationship with an Investor that overlooks litigation and low owner occupancy ratios. The flipside is that rates are typically .5% higher than normal financing due to the risk factors involved. In the past, this Investor required a minimum of at least 20% down on a primary residence, but now they are allowing 10% down. I’m a fan of purchasing non-warrantable condos because I believe one can negotiate a good deal due to the barriers of entry. In most all cases, the litigation ends up resolved, the condo project gets what they want, and the marketability and demand on those units increase.
We provide loans for condominiums that have pending litigation associated with their HOA (Home Owners Association).