S.J. from New Haven County writes:
Dear Mister Condo,
I want to sell my condo but the bank needs to ask questions to the condo association. What information do they need?
Mister Condo replies:
S.J., I assume the bank in question here is the one that will be providing financing to a prospective buyer. Most of today’s mortgages for condominiums require that the condo qualify for FHA-approved financing so my best guess is that the bank needs to ask about the association’s FHA certification (or lack thereof). Even if the mortgage is not from a lender requiring FHA certification the lender is likely performing due diligence in finding out about the state of the association’s financial affairs. After all, if they are going to lend $100,000 or more to a prospective buyer, they want to make sure that there are no upcoming special assessments, pending litigation, or any other potential financial burden heading towards their borrower who may be able to repay the loan if these other factors exist. If it is FHA-related, the bank has a checklist of questions including the percentage of delinquent accounts, rental units, and other factors effecting FHA eligibility. These lending rules have been in place for some time now so the questions are fairly standard and the responses from the association will determine whether the lender will make the loan. Best wishes.