I've probably funded 40 VA home loans in 2009, many of them for unapproved condominium complexes. In Southern California, it's quite common along the coastal communities for buyers to look at condos, townhomes, or PUDs as lower-cost alternatives to single-family homes. Declining prices, along with higher VA loan limits have afforded many active duty and former service members the opportunity to scoop up a piece of the California coastal lifestyle by purchasing one of those properties.
Sellers often cringe when they receive an offer using VA home loan financing. The general thought is that the VA condominum complex approval process is time-consuming, onerous, and difficult...
Nothing could be further from the truth.
All loan types, including FHA and conventional vet the condominium association's organizational documents, finances, and residency mix. In fact, the VA guidelines tend to be the least restrictive of all three loan types.
Three tips for real estate agents when presenting an offer, on an unapproved complex, with a VA mortgage:
1- Use a VA lender who has been through the VA approval process MANY times.
2-Review the required documents' checklist:
The document checklist is available in Chapter 16 of the VA Lender’s Handbook. Specifically, the table of required documents is available on page 16A.03. I suggest that the loan originator AND both real estate agents AND the escrow officer review this table as soon as an agreement of sale is executed. At first glance, the list appears to be ominous (lots of dead trees). Upon more careful scrutiny, it is plain to see that only 5-6 documents are required; the other 20 or so are only required IF AVAILABLE.
3- Consider the time saved by using an attorney's opinion letter:
The key component to the VA condominium complex approval is the Attorney’s Opinion Letter. Essentially, the VA relies on the expertise of an independent attorney to evaluate the condominium documents and offer an opinion as to whether or not those documents comply with the VA regulations. An attorney opinion letter is NOT a requirement for the submission package but attempting this without one is not recommended. While it adds another layer of cost to the approval process, the result is a greatly reduced examination time at the VA.
VA condo approvals are quite easy if you know what to do. Follow these three tips to guarantee a smooth transaction or contact me with any questions you might have.
Glad to hear someone is having an easy time with the VA.
Good Info - I know the FHA has new guidlines for condos - do these apply to VA?
I'll look for your reply, as I have a REO Condo for sale - very little attention these dys.
Merry Christmas,
John
Definitely bookmarking this one. And I hope you enjoy your California lifestyle - I'm a little jealous! Merry Christmas.
Thanks for the tips!
What a great, concise and easy to understand explanation of the process! I wish you were in my market!
The FHA condo guidelimes are becoming more like VA (easier) but VA remains to be the simplest, John.
Brian,
Thanks for sharing your experience with the VA. I've never asked for an Attorney's Opinion Letter and am going to forward this info to a couple of loan folks I work with, for their reference. Great Idea.
Thanks for the good reference links, too!
Brian - Thank you for a great article! Do you know FHA as well as VA? Didn't FHA eliminate the spot approval process as of early December? I was under the impression that FHA condo guidelines were becoming stricter, not easier. Any insight you could offer would be great. Thanks.
Great info Brian.... have you used number 3 much in Arizona?
Thanks Brian! I have bookmarked this for a place to refer back to when using VA loans. The hardest part so far seems to be able to get sellers to accept them! Glad to hear it is easy once you have received acceptance!
I know FHA very well, Coral. I'll write some tips about how to get make FHA complex approvals move much more quickly, later this week.
Debbie, we should talk about how to improve your chances with VA offers. My agents get them accepted because I help them prepare the VA approval letter so that there is no doubt that the seller understands that there is no cost to him.
Brian,
Thanks for the information! It very nice of you to share it with us!
Happy Holidays!
Thanks for the great information. Sellers here still cringe whenever they hear VA Loan or even FHA loan mentioned. Bookmarking for the future!!
Hi Brian, Your advice to get an attorney opinion letter makes a lot of sense. Hope your Holiday Season is the best ever !!!
Terrific! Thanks for the referral too.
Sounds like a savy strategy with the attorneys opinion letter. Thanks for the info.
Good points. I did a VA sale recently and it went through pretty good, but there were some hiccups.
Thanks for the great information. The attorney letter is a good piece.
Great points Brian, there is NO REASON to fear a VA buyer, instead we should all be working together to help them succeed. They served our country with loyalty and courage and many sellers and listing agents openly discriminate against VA borrowers.
It's a great loan for great people. I represented several VA buyers in 2009 and we did not have a bit of trouble on any of those loans...not one bit.
Brian, with your clear understanding of the SoCal market for VA buyers, please feel free to contact me so I can introduce my next Veteran client to you!
Vic Steele, U.S. Army, 1984-1990, Sergeant, Honorably Discharged
Vic Steele, Broker, CA DRE License No. 01349863
Valet Real Estate Services
571 N. Poplar, Suite H, Orange, CA 92868