Legal Question in Real Estate Law in Massachusetts

Re: Condominiums and home insurance

I am not sure what the reference in your subject line to

"home insurance" refers to, since this issue here seems to be

obtaining financing. What you may be referring to is

"mortgage insurance", which insures a lender against a loss

due to a borrower defaulting on a loan that is for more than

80% of the purchase price.

A "conventional" home loan is a loan with 20% down (or

conversely with 80% financing. Generally speaking, the

lender looks at your credit and down payment, and the Property.

When the Property is a condo, most lenders must abide by

the standards of the "secondary market", agencies like

FNMA and Freddie Mac. These agencies set standards for

criteria like the number of owner occupied units that are

in a condominium complex. I do not believe that commercial

units can be counted as "owner occupied" residential units

for underwriting purposes.

A couple of suggestions-

1. Ask the realtor to find out what lenders have lent on

on other units in the condo complex. If there is no realtor

involved, try to get the names of the managers, and find

out from them what banks have made loans. Then try to

apply to one of them.

2. Talk to the owner about giving you a second mortgage. In

some underwriting situations, the amount of the second mortgage may

be used as if it were "down payment", so that you would only end

up borrowing 80% from the lender.

3. Talk to a local bank in the town where the project is located. By this

I mean a small-town bank. They may be able to make a loan in certain

circumstances where they do not have to follow the "owner occupied"

ratios as closely as some other mortgage companies. The term that is

used is "portfolio" lending. This means that they will keep the loan

in their own portfolio, rather than try to sell if on the "secondary"

mortgage market.

Good luck with your transaction.

Regards,

Alan

DISCLAIMER: According to the rules of the Massachusetts Supreme Judicial

Court, the contents of this reply should be construed as

advertising, and are not a substitute for consulting

with an experienced attorney.

Alan D. Humbert

Law Office of Alan D. Humbert

134 Main Street