12.19.2023 | Webcasts & Podcasts

The Marcus Hour | 12.15.23 | Ep. 11 | Fannie Mae and Lender Questionnaires: VA Loans, FHA Loans, and dissecting misconceptions about the Unavailable List

Join Jake Marcus, Stephen Marcus of Allcock and Marcus along with special expert guests, Samuel Chazanow and Tess Leighton of Movement Mortgage for an insightful Marcus Hour, where we delve into the dynamic landscape of lending requirements. In this session, we’ll provide you with the latest updates on VA Loans, FHA Loans, and unravel common preconceptions surrounding the enigmatic lending “Unavailable List.”

The Marcus Hour will guide you through the intricacies of these loan options, helping you make informed decisions tailored to your needs, especially the latest trends in the context of condominiums and Fannie Mae.  This Marcus Hour is your gateway to valuable insights and practical knowledge in filling out Lender Questionnaires.

Join us for an engaging discussion that promises to empower you to understand the best lending practices.

 

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Jake Marcus: wanted to thank everyone for coming in, as we see, everyone

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Jake Marcus: rush the gates and come into our exciting seminar on Fha va loans all the exciting things. And this is a very timely Marcus hour. This is the eleventh episode of the Marcus hour. And we have a very special guest Sam Chasin. Now, is that how you pronounce it? Yes.

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Jake Marcus: perfect. That’s usually one of the harder parts getting started when I have to pronounce names, but got it there. So we’re good. Now. We got to get into the easy stuff, the the, the lending, the new loan requirements and special changes that have occurred just this past week, as it relates to Fannie, Mae and Freddie Mac and condo lending so we’re gonna jump right in. I’m gonna I’m gonna share

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Jake Marcus: my screen, which will show the webinar

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Jake Marcus: a slide show

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Jake Marcus: and we’re gonna start it up. So this is, yeah. The the eleventh episode of the Marcus hour we got myself, Steven, Marcus and a special guest, Speaker, Samuel Chazon. Now from movement mortgage thank you both for joining this morning. Right before the holidays. Good time to get it, and excited to to share what we’re learning here in the

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Jake Marcus: condo lending and blacklist information. So what our topics are gonna be today? Are Fannie mae and the lender questionnaires va loans, fha loans and dissecting misconceptions about the unavailable or blacklist and that and that is a list that Fannie Mae and Freddie Mac have previously concealed.

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Jake Marcus: As of this past week we’ve learned that they will be more transparent with these lists. And this relates to

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Jake Marcus: being on a list for several reasons or or why condos can be on a list for several reasons which include structural integrity inspections that are needed. Critical repairs needed.

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Jake Marcus: insurance is a big one. Even even short term rentals or transient properties are a big one. I believe. Commercial space

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Jake Marcus: if there’s commercial space on the property, that’s a big one, kind of arbitrary. But we’ll get into those details here and more today. Yeah.

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Stephen Marcus: Started planning for the for this webinar, which was right after the last one the

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Stephen Marcus: list that they may is keeping and only distributed to their lenders.

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Stephen Marcus: Oh, was

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Stephen Marcus: there was no news about that being available to homeowner associations and condominiums.

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Stephen Marcus: and maybe Jake can give a

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Stephen Marcus: rundown of What’s basically happened

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Stephen Marcus: since Wednesday of this week with both Danny and Freddie.

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Stephen Marcus: I know affirmative quite a bit trying to get the the list to be more transparent we did. Freedom of information requests

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Stephen Marcus: F. Hf. A. Planned over the they knew they didn’t have a copy of any list which seems odd, since they’re Conservator for Penny and Freddie.

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Stephen Marcus: And yeah, the Community Associations Institute done, Bauman and Phoebe NASA,

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Stephen Marcus: and some very good volunteers on a national basis have been working in discussions about the list. And Jake, you want to give the update on that on the list.

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Jake Marcus: Yeah. So

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Jake Marcus: since about May of this year we had been aware of this growing list. The condo black list, which

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Jake Marcus: basically was a do not lend for certain reasons list. And

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Jake Marcus: since then the look

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Jake Marcus: on from about 1,700 to 2,300 and that list is growing

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Jake Marcus: at frequently even more. That’ll probably be more next month.

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Jake Marcus: And the biggest thing

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Jake Marcus: that basically happened. Or we’ve been pressing and and basically asking for. Steven mentioned a Foia request which is freedom of Information Act requests to learn about this list. They basically

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Jake Marcus: said, No, there is no list and didn’t receive anything we did come into possession of the list, and

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Jake Marcus: thereafter kind of put the pressure on Fannie and Freddie to

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Jake Marcus: admit that there’s a list this past week. There was an announcement that

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Jake Marcus: they will be more transparent, starting at 2024,

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Stephen Marcus: I believe, for Freddie. It’s February 2620 24. Does Fannie have an official date? I think they said the next quarter, which would be

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Stephen Marcus: same, II think they’re both on the same time. Frame. Yeah, Fannie, maybe a little bit later, third or fourth quarter when they actually come up with that. But they’re they’re working. Yeah, this is a big win for Condos. And and the little guy essentially as now.

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Jake Marcus: condos aren’t left in the dark anymore. It’s gonna be more informative. It’s not just gonna be released to the public from my understanding more. So I is gonna be available. A a as it’s asked, is that correct?

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Stephen Marcus: Is is that there?

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Stephen Marcus: Danny said

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Stephen Marcus: that they, before economy and project gets on the list

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Stephen Marcus: that they’re gonna use.

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Stephen Marcus: I don’t know if that’s a reasonable ethics to speak to a representative from the kind of minimum homeowner Association

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Stephen Marcus: before it’s on the list. And then there’s gonna be an interactive process where you can. The Association can discuss the issues with

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Stephen Marcus: Danny and Freddie, and is going to be a an appeals process. Now, we don’t know exactly what they’re that’s gonna look like, because they only made the announcement on Wednesday, so 2 days ago, and December thirteenth.

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Stephen Marcus: And let’s let’s take Freddie’s February 26 day they have a lot of work to do in terms of coming out with the details of the of the process. But it will be

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Stephen Marcus: out there to the people who need to know about it, and that should make it somewhat easier for associations

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Stephen Marcus: and for lenders. So but it falls short of publishing the entire list. And we think that’s a good thing, because publishing the list would have an adverse impact on associations that are on it and maybe they’re wrongly on it. Maybe a lender

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Stephen Marcus: found something, and they were wrong about it. Put them on the blacklist. But they really yeah shouldn’t shouldn’t be.

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Jake Marcus: And to not to mention it’s just embarrassing. And then not we don’t want this to be a smear campaign against condominiums. Or it can be embarrassing. I mean, if sometimes you’re on the list for reasons that that are, that are, I guess, hidden, or more. Something that you

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Jake Marcus: didn’t realize you had to do as as volunteer board members. It can be y. You have a fiduciary duty, but sometimes you may not you? You’re not expected to be an engineer. You’re not expected to be a lawyer, not expected to be an insurance agent. We recommend, or or even a reserve specialist. And and we recommend reaching out to those people as as one tool that you can use as a as a best practice. But but let’s get into. II actually just

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Stephen Marcus: with a couple of a couple of questions. I was gonna make a quick note that. Yeah.

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Stephen Marcus: there were good lists that you want to be on yeah, for. So on the good list.

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Stephen Marcus: I, of course. Now listed every year is one of the top 100 fancy dresses in Boston area a bad list would be the black list, and you can’t get any loans

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Stephen Marcus: that was. Seems to be a list that you don’t want to be on, just like you don’t want to be on the list on the Us. Postless postal service of the 10 most wanted people. By the FBI. It’s nice to be wanted, but it’s better if it’s not part of the FBI.

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Jake Marcus: Yeah,

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Jake Marcus: and I post it to the chat. A link and this is a resource to the Fannie, Mae blacklist. Basically information guide and and what we’ve been doing with this is a good way for you to type in your condo association. And

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Jake Marcus: you know, basically, right? Right? If you’re a unit owner, right? If you’re a board member, property manager, what have you? And basically, this is a way to figure out if because these are not public right now, this is a way for you to figure out with without having to apply for a loan, etcetera. Figure out if you are on the blacklist and then we can all we can have a further discussion as to

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Stephen Marcus: best practices and ways to get you off of the blacklist.

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Stephen Marcus: So if they wanted to search this

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Stephen Marcus: list that you’re talking about, it, would it would seem that only special people would have have such a list.

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Jake Marcus: Right? So so this is, it’s in the chat. May maybe. Maybe they can, you know, go to a Taylor Swift concert and find it.

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Stephen Marcus: So the list is at Www. A. M. condo.com. It’s a free service, and you can search, as Jake said by name of the Condominium City State.

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Stephen Marcus: a etc. if you follow up from there somebody in the office can tell you why you’re on the list, whether it’s structural efficiencies, critical repairs insurance issues which is becoming pro problematic these days. But yeah, for the moment, it’s a resource, and we suspect

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Stephen Marcus: that when Freddie is in full mode on February 26 and and Tanya that they’re gonna have a similar

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Stephen Marcus: search feature and

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Stephen Marcus: as Sam knows taf Aj. they’ve always had one to see if it’s an approved project. So Fannie and Freddie will. Eventually. Yeah. Be up to speed.

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Sam Chazanow: Va, as well. Va, ha! Has their lists that are approved, expired and rejected with the reasons. So this complete transparency, and up until couple of years ago Fannie had their lists public. Anybody could go to Fannie Mae Com and see that.

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Sam Chazanow: But right now the list is limited to lenders. Any lender can request access to that list from Fannie Mae.

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Sam Chazanow: unless that lender is an actual seller service, or they can’t have access to decisioning on that. But they can have read only access. And I gotta tell you that list changes daily.

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Sam Chazanow: So if we’re involved with the loan it may be, in the system. And, by the way, just

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Sam Chazanow: to put it out there, only a small percentage of the Condominium projects in the country are even in Fannie, mates, database there’s only a small percentage there’s a lot that are not out there that lenders have to do their own wrapping and warranting on. But for the ones that are on there that are unavailable, any lender can see that. And the reason why. And

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Sam Chazanow: we see Fannie Mae.

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Sam Chazanow: changing statuses literally at the drop of a hat

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Sam Chazanow: lenders that have access to their Cpm. List that can make decisionings are under due diligence to notify Fannie if they find something during their project review that would impact their decision.

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Sam Chazanow: and

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Sam Chazanow: I could be working on a loan on Monday, and by Tuesday of next week. I can see that Fannie made it unavailable because of an insurance issue, a deductibility issue, so they quickly can turn on that so their approval does not survive the loan process.

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Sam Chazanow: We also see Fanny May adding projects to their approved list.

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Sam Chazanow: just to find out that they don’t completely review all aspects. We had a project that was reviewed by Fannie last week, but it turns out when the insurance policy came in, it had actual cash value which nullified it.

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Sam Chazanow: So the project came on and came off the list within a 7 day timeframe.

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Sam Chazanow: So the information that’s out there is still works in progress, and still needs due diligence.

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Stephen Marcus: And and and for the backdrop of this list shape talked about going from 1,700 to 2,300, and on November 20 eighth. That was up to a little bit over 2,400 but if you go back 5 years or so the the list probably had 300 names of that the key trigger to the change was on June 20, fourth, 2,021.

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Stephen Marcus: As everybody knows, the Champlain Tower. So the Condominium Tower and serveside Florida pancake killing

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Stephen Marcus: 98 people, and the at the time inspections weren’t required by the county until the 40 Year Mile post, and they would just be for that milepose. So these

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Stephen Marcus: temporary requirements on structural repairs, etc., came up, and then, as we expected, as time went on, the temporary had become permanent requirements, and in

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Stephen Marcus: the the the July announcement for September eighteenth. That changes critical repairs has been added to the list, which is to me is some fortunate, because they give examples such as

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Stephen Marcus: water leaks which could end up with mold. But you could have a hot water heater that goes, and

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Stephen Marcus: you may not know for quite a while as to whether it has resulted in a serious mold issue, or whether it was tried out and properly remedied before. So there are some tough things that people in doing what Sam’s doing have to look at fairly closely these days.

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Sam Chazanow: Most important things, too, is as of the new changes.

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Sam Chazanow: If a lender cannot determine

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Sam Chazanow: whether or not there are critical repairs. then we have to make the project unavailable.

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Sam Chazanow: I mean. So you’re guilty until proven innocent. That that’s one of the new changes that went into effect in September.

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Sam Chazanow: I don’t think anybody will disagree if you have a a project that has true structural issues have failed. Structural integrity inspections.

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Sam Chazanow: There’s problems and lending shouldn’t occur. But if you can’t determine, because the information’s not there, or the hoa doesn’t provide it. Then it automatically has to go on that do not lend list

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Stephen Marcus: the.

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Jake Marcus: And I wanted to. So, just just as a and that’s a good point. And and I do want to. Just we’re fif. We’re almost 20 min. And I just wanna introduce. We haven’t gotten past Sam, so you may. You may be wondering who this guy is who’s talking to the market. He he is a very special guest. We’re happy to have him today. Certified mortgage broker, which is

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Jake Marcus: one of the the highest designations you get as a mortgage banker. And he is an expert in the field of condominium financing and what I wanted to get to. It’s a good segue this list has been around or there’s there’s there’s condos on this list that have been on the list since I believe, 2,005 or so movement mortgage the the the firm that Sam is at

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Jake Marcus: is has been around since 2,008, as you may recall, 2,008 was its own crisis. With lending

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Jake Marcus: and and and movement mortgage worked on a specialized service a and a unique service 2 condos to to mortgage, to to the mortgage industry. And Sam has been at the forefront of that. We’re very happy to have him. He has over 35 years experience. He’s a published author.

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Jake Marcus: and and as the book is condominium financing fundamentals, and this is the 2023 edition, be sure to pick it up. Order it. Maybe it’ll be a nice stocking stuff for this this Christmas would be a great gift

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Jake Marcus: I I’m promoting you, Big Sam. We need to get. This is the the number one best selling book this this winter. So we’re happy to have you and and one thing I do. Wanna note

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Jake Marcus: yo, you know you you need to with this list, with the with the information that’s out there.

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Jake Marcus: It’s hard as a as a volunteer board member to just be able to know, checklist, checklist, check off everything you need. It’s important to to

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Jake Marcus: come to the experts, go to the experts. Get the right people in place who are more able to assess your situation. It is case by case. It’s not a one. Size fits all type of situation. Where? Oh, you have this issue. We can get you off with this.

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Jake Marcus: you you need to go to the attorneys, the the the financing specialists insurance agents.

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Jake Marcus: engineers reserve specialists. A. A, I think, in Florida, starting on January first, 2025. If you are a building of 3 stories or higher. And this is is is in light of surf side. Senate Bill 4 D has come out. And basically, you’re going to have to align with certain structural integrity requirements.

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Jake Marcus: As well as reserve studies and reserve account requirements. That is a pretty stringent. basically requirement that has

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Jake Marcus: come into legislation. And

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Jake Marcus: there’s some pushback. But

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Jake Marcus: I think it’s mostly right

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Jake Marcus: especially with Florida, that has.

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Jake Marcus: I believe, 800 plus. So a third or more of the list.

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Jake Marcus: obviously, II we do represent in New England as well the basically one of the things you could say is, let’s say, the the reserve requirements. There’s nothing that is being pushed

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Jake Marcus: a

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Jake Marcus: imminently. But it’s something to be aware of, and it’s probably a best practice to follow what Florida is doing. By kind of aligning with these structural integrity requirements. Reserve requirements and and and you kind of go down the list and do basically a a health test on your financial health structural integrity, health?

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Stephen Marcus: but yeah, th, there’s so many people out. There is a lot of resources we just encourage to move the slide, if nothing else, just to move the slide. Okay, for a while.

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Stephen Marcus: He, he’s one of the 10 best best men in Florida. So we’re in a unique club. The I want to touch. But question is, cause it’s in the it’s in the title, and nobody has

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Stephen Marcus: we haven’t talked about it yet. We have them on past some of that webinars. But couple of things you have to know about this phone. 1076, Danny and Freddie. Well, it’s a penny. And Freddie generated a simple form. It’s not required by Fannie and Freddie. They require that to do is do diligence and see if the Association

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Stephen Marcus: meet the criteria associations should not be answering yes or no on some of the questions. And the Londoner question is such as, structural integrity issues.

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Stephen Marcus: critical repair issues unless they have the expertise to do it, which most don’t. So unless you know that there’s a structural issue.

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Stephen Marcus: You shouldn’t answer. No, there are no structural repairs. And we have associations, because that’s who we represent, and we have them answer that the lender should do its own. Higher. Somebody should do its own inspection and determine if it’s satisfied with the condition of the property. Now, the lender can also get 12 months of minute meeting minutes.

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Stephen Marcus: which is definitely gonna talk about if there are any major

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Stephen Marcus: repairs special assessments plan big projects plan. So I just wanna make sure that associations are not do not feel that they’re obligated to answer those questions. Yes or no.

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Stephen Marcus: some of them the managers and boys are really not in the position to know. on 1 one of the questions we have somebody asked about owner occupancy in an established condominium

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Stephen Marcus: my understanding is that Paddy and Freddie will go to 0% on or occupy

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Stephen Marcus: if the loan is to somebody who’s gonna own or occupy in other situations, I believe it’s 50%. Fha, Fhaj, I believe, is that 50% so depending on whether you’re a new development or an established condiment.

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Stephen Marcus: You would wanna talk to somebody like like Sam. So that if there’s gonna be a problem getting along because of owner occupancy that he can guide you on the best way, and maybe different you to Fha or BA, if those are better options

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Sam Chazanow: in terms of owner occupancy. You’re absolutely right.

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Sam Chazanow: If the for conventional financing Fannie and Freddie it doesn’t matter how many investors you have in that project as long as your buyer is owner occupied, or a second home buyer.

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Sam Chazanow: Fannie and Freddie will allow us to do loans in that project.

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Sam Chazanow: Okay, so Fannie and Freddie want us to dilute the investor concentration, and that’s important.

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Sam Chazanow: Va. Once the project’s on the Va. List, we never go back and get a new questionnaire. So we’re not asking about investor concentration, occupancy, etc.

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Sam Chazanow: Fha, has actually reduced the owner occupancy percent on their what we call Hrap reviews. Reviews done by HUD itself down to 35. So we can have a project with up to 65 investor and still get Fha financing done in that project to dilute the investor concentration. Okay, that’s the that’s great, because that’s

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Stephen Marcus: my memory was it was 50% at one time. And it looks like fha is moving in the in the in the right direction. And kind of a nice thing that

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Stephen Marcus: Federal Government. You think of bureaucracies and red tape and all that. The fact that say, lenders could move the needle so that Fha would go from 50% 35% to get more in line with Fannie and Freddie.

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Stephen Marcus: but are definitely good things.

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Sam Chazanow: Well, that’s because affordable inventory happens to be one of our biggest problems.

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Sam Chazanow: The government agencies are working very hard on creating accessibility to credit. But inventory is an issue, and especially for first time buyers. You’re low to moderate income buyers. Condominiums are an important property type. So the agencies are working

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Sam Chazanow: where we we run into issues is when lenders put their own rules above and beyond the agency guidelines. We typically see lenders that will have

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Sam Chazanow: an occupancy limit of no more than 50% investors. Some will even go no more than 25% investors, and those are lender imposed rules.

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Sam Chazanow: But as far as the actual true agency guidelines, Fannie and Freddie do not care.

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Stephen Marcus: Jake, do you wanna move the slide to? What should association managers do to increase chances of getting?

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Stephen Marcus: And then maybe, if you can hit upon the

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Stephen Marcus: the slide right after that. Because you highlighted

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Stephen Marcus: some of the areas. And then, after you do that, maybe we can have Sam take over and his do do his thing on

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Stephen Marcus: the va fha! And the idea of having local convincing local lenders to give fixed rate or 7 year rounds, or whatever as alternatives. If people around the in the Freddie Blacklist, and another option is needed.

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Stephen Marcus: Jake, do you wanna just quickly talk about the highlight. The 5 issues that you have both 4 issues that you have.

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Jake Marcus: of course. So what should associations and managers do to increase the chance of loans, condominium owners, whether for new buyers or refinancing. Yeah. So possible issues, we’ve touched on quite a few of them. But

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Jake Marcus: here here’s 5 of them that are are issues and and possible answers, ways to kind of work with this situation. Structural issues. As I mentioned, you know, you can bring in

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Jake Marcus: engineer or and this goes with critical repairs as well. Engineers, architects, experts who kind of have a better understanding of.

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Jake Marcus: you know, as a board member, even as a lay person. You’re not just going to walk outside and be like, Oh, yeah, looks like that. That that’s falling. Or there’s an issue we need, we need to identify it.

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Jake Marcus: you’re not a a. And this works in tandem with the attorneys as well, because you want to know when these will be required. For example, in Florida. There are new requirements as to

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Jake Marcus: 25 to 30 year milestone inspections, recent certification at 40 years. In Massachusetts. There, in the city of Boston, there’s a requirement for facade inspections, I believe that’s 5 years and these are just things you want to do and keep in mind as you kind of navigate the buildings. Structural integrity.

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Jake Marcus: And and and there’s a there’s a sub sub sub sub sector of this, that if you’re if you are involved with construction litigation, that’s also a a way to end up on the blacklist.

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Jake Marcus: Obviously, that might be a developer turnover issue. And you kinda want to figure out how to navigate that that will include naturally, attorneys and expert engineers. Insurance. I think the big thing here. Yeah. You wanna figure out how if you’re 100 or you have the proper insurance in place. Insurance agents are

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Jake Marcus: a great way to kind of navigate this issue. Figure out the best insurance. We have a a book of insurance agents that can help in both Florida and New England States.

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Stephen Marcus: in case anybody has a notice, because you haven’t had an insurance renewal at your condominium. the

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Stephen Marcus: insurance

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Stephen Marcus: for kind of manyms is, and what I am calling prices mode

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Stephen Marcus: in Florida. It’s a huge mess the insurer of last resort. The State fair plan in most States, but citizens insurance in Florida.

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Stephen Marcus: There the land error of first resort and

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Stephen Marcus: a lot of carriers have left the State carriers are also or canceling directors and offices. Liability insurance in to give you the worst case I’ve heard so far, we’re doing some work in Montana, in Big Sky and Yellowstone.

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Stephen Marcus: Really and truly, but not with John Dutton. And the worst case we have is a condominium very high end.

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Stephen Marcus: but in 2020 the premiums for 56,000 a year.

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Stephen Marcus: in 2023, the 673,000

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Stephen Marcus: a year. There are very rich people living there, so they’re paying the $620,000 increase.

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Stephen Marcus: But even to a rich person they stay rich by not having increases of $620,000. So talk to your agents now about what to expect at renewal. We’d like to think that it’s gonna be 10 or 20%,

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Stephen Marcus: maybe 30%. But we are seeing the 900%. And we’re seeing the this Montana one with the which is probably like, it’s a 14 x of what the premiums use today. So it’s it. It. It’s

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Stephen Marcus: a mess out there. And insurers are also starting to not ensure rooms for replacement costs, doing them an actual cash value meaning. They’d appreciate them if they’re older ruse. And technically, that doesn’t comply with

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Stephen Marcus: 100% replacement cost that pay them and Freddie want and I think they’re gonna have to be further discussions with Danny and Freddie and fha, and Va in terms of is there any

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Stephen Marcus: way that we can be a little more flexible? So that the yeah, the insurance is available. So Amy and Freddie can continue the the money back to the local bank so that they can learn more.

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Stephen Marcus: Jake. Sorry, fair taking off that all that time.

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Jake Marcus: Alright, so yeah. And then the next thing would be reserve studies. There’s plenty of reserve specialists out there A lot of people may look at reserve studies or reserve accounts and say.

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Jake Marcus: Why, why, I don’t even buy green bananas! Why would I? Why would I

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Jake Marcus: say for deferred maintenance. Why would I do that? Well, it’s important. You you wanna make sure you have it. You wanna make sure you have that rainy day fund. It’s a it’s an important area. We recommend reaching out to reserve specialists who can conduct reserve studies and figure out how to navigate, navigate that kind of area in Florida. These are, gonna be more stringent. As I mentioned starting January first, 2025

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Jake Marcus: And I mean in in Massachusetts. Yeah, just says adequate reserves, which is a little more vague. But best practices. I think it’s 10 of your operating budget to be held in reserve accounts. And and that’s kind of a a rule of thumb. Every. Every association is different. So I think it’s important to have a a study done lender questionnaires we would recommend filling these out with the guidance of

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Jake Marcus: a attorney. and kind of looking at these questions, the 1076 forms I wanna mention. So in June 2021, the Champlain Towers collapse occurred in December 2021. There were temporary.

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Jake Marcus: A temporary addendum was put into the lender questionnaire. This takes up about 3 of the 8 pages on the form, 1,076 questionnaire.

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Jake Marcus: The majority of these questions relate to structural integrity construction basically things along those lines. So it’s a huge topic. The the majority of this of the issues that you want to make sure are covered in light of surf side are the structural integrity and and safety of the health, safety, and and welfare of the of the building.

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Stephen Marcus: charge back to the cell of the buyer, the lender. The cost for the legal review, just like the manager charges for filling out the form initially, and then we review it and and make changes to protect the association. We. So we typically require that we build the association. The association is our client.

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Stephen Marcus: we advise associations to get a bank check from the person re request in the question. They are after our review so that the association gets reimbursed for every penny of the legal costs involved with the review. I think we’re gonna shift over to

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Stephen Marcus: to Sam even more at this point, in addition to Fha Va. And the idea of local lenders and warehousing until people are off the penny of Freddy list.

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Stephen Marcus: Maybe a softball question. bio says a lot about Florida. But one of the things that I’d like you to address is if you’re lending nationally. And then the second softball question is, gonna be, would it be in the best interest of the kind of minimum association

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Stephen Marcus: to have a preferred lender who understands

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Stephen Marcus: there, let’s say, 1,000 unit condominium who’s gotten loans in it. You can’t require that people use that lender. But does it make sense to do that? Is that something that that movement does or could do is part of it’s bucket of services.

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Sam Chazanow: Yeah, absolutely. Regarding Florida, we do a lot of condominium business down in Florida.

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Sam Chazanow: I spent many years down in Florida, and I’m actually on the Florida realtors faculty. And II teach ce for Florida realtors. But in in terms of

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Sam Chazanow: lending. Nationally. We are a national lender.

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Sam Chazanow: and we work with hoas, and I like meeting with H. O’s. I like meeting with Hoa’s counsel. I think that’s very important.

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Sam Chazanow: and understanding what the lenders require.

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Sam Chazanow: The 1076 that you mentioned the form that Fannie and Freddie agreed upon. That was from 2,001 after Champlain Towers. It’s now 2,023, and a lot of the rules have changed. So a lot of the the data that we need as a lender has changed.

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Sam Chazanow: and that questionnaire has not been updated.

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Sam Chazanow: So what I would recommend is that attorneys that represent hoas work hand in hand with lenders so they can create the data form that lenders need based upon the current guidelines

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Sam Chazanow: and guiding them accordingly, without coming to conclusions. And one of the biggest ones is right now, we’re not asking, are there any structural issues? All we wanna know is, are there any structural reports completed in the last 3 years, and if so.

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Sam Chazanow: please provide those to us.

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Sam Chazanow: We’re not asking for conclus. Just give us the data, and then we will make the reviews at that point.

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Sam Chazanow: and by working with lenders that under right to pure agency guidelines, let me explain what that means. You’ve got Fannie, Mae and Freddie Mac.

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Sam Chazanow: Some lenders will take the approach that they’ll blend both agencies guidelines.

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Sam Chazanow: and go with the more restrictive of the 2, and each agency has their own nuances.

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Sam Chazanow: Some lenders will take agency guidelines as a base, and then create their own guidelines on top of that which are much more restrictive, but they do that for risk management purposes.

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Sam Chazanow: and in those cases

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Sam Chazanow: they can deny. A borrower looking to purchase a unit in a condo, stating that it’s not warrantable when in reality it may meet Fannie and Freddie’s guidelines. But nobody really knows that because their guidelines are public, but their lists are not public.

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Sam Chazanow: So you have a borrower that spend a lot of time and money, a seller that took their unit off the market during this marketing period and lost other opportunities just to find out that that loan was denied by a lender that had more restrictive guidelines than the agencies.

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Sam Chazanow: So to your point is.

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Sam Chazanow: or an hoa to partner up with the lender that works directly with Fannie and Freddie that follows each agency’s guidelines and has no overlays, is a huge benefit.

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Sam Chazanow: It’s a better service for the borrowers.

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Sam Chazanow: Better service for the Hoa, because we’re aligned in that we want to not only maintain but improve the value of the projects that they manage, and we want the borrowers to realize that at the time of purchase or refinance, based upon the accessibility of financing options.

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Jake Marcus: Fantastic.

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Stephen Marcus: do, do you wanna go into?

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Stephen Marcus: Do you think? Now, local vendors? Yeah. Absolutely. Va and Fha are great programs. And they’re not under the fhfa. They’re they’re actually under the government itself.

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Sam Chazanow: And this is one of the courses I teach for Florida realtors. Fha! They changed their rules in 2,019, and they now allow us to do single unit approvals.

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Sam Chazanow: One of the biggest misconceptions in the marketplace and with hoas

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Sam Chazanow: is that it’s a time consuming process, and it’s expensive to get their projects approved or recertified. But the truth of the matter is, it’s absolutely free. Neither Va. Or F. 8 charges for this service.

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Sam Chazanow: As long as we have an association that wants to get their project approved. our team and I have a special team within the Condo department that will work with the attorney for the Hoa to gather. The docs

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Sam Chazanow: will do the initial review and the submission for that, and the process only takes about 4 to 6 weeks

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Sam Chazanow: in terms of mass, I think right now. You have

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Sam Chazanow: 3,200 expired Fha projects and 300 and true proof projects. So you have over 3,200 projects that previously met all the Fha guidelines, but hit their expiration term, and we look at that as a huge opportunity.

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Sam Chazanow: something that hoas can do to offer that type of financing if they desire it, to their unit owners, and that may attract a larger pool of potential buyers

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Sam Chazanow: in terms of Va. Same thing. Va, it has just under 2,900 approved projects in the State of Massachusetts, and in 2,019 they lifted all the lending limits. So we’re no longer limited to geographic Loan limits. We’re doing multi 1 million dollar Va. Loans now.

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Sam Chazanow: and

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Sam Chazanow: both Va. And Fha fixed rate loans

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Sam Chazanow: our assumable loans.

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Sam Chazanow: So imagine 2, 3 years ago, when rates were under 3%.

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Sam Chazanow: Any veteran, any fha buyer that received financing back, then sitting on a rate sub 3, that a new potential buyer can assume

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Sam Chazanow: huge opportunities, great benefits. And again, there’s absolutely no cost to the Hoa for this.

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Sam Chazanow: Now, as far as local lenders fixed rate.

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Sam Chazanow: we work in the capital markets and you had mentioned in Florida. One of the biggest problems is actual cash value, especially on roofs. They’ll have a full replacement cost.

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Sam Chazanow: We are working with lenders. Now, nationally. that understand that problem, understand the issue in Florida and are willing to take that risk. So we are funding through certain private investors

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Sam Chazanow: projects that have

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Sam Chazanow: actual cash value on roofs. And we’re one of the few lenders that can do that in Florida. And I’ll tell you what? It’s making a huge difference

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Jake Marcus: that is huge, that we see roof issues and roof damage

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Jake Marcus: essentially, every time you would think there’s a hurricane.

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Jake Marcus: you would expect

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Jake Marcus: there to be a lot of roof damage if he comes to the point where every time there is a

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Jake Marcus: even tropical storm. there can be

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Jake Marcus: hundreds or thousands of claims. And that’s what’s kind of in part led to the insurance crisis in

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Jake Marcus: Florida.

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Jake Marcus: The insurance issues are. No, no, I would say, no jurisdiction or area or geographic region is immune

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Jake Marcus: from the possibility of insurance issues. Florida is just

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Jake Marcus: in a huge huge mess with that, and it’s almost a

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Jake Marcus: perfect financial storm as to

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Jake Marcus: insurance issues the the structural integrity requirements and reserve requirements that are going to be needed.

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Jake Marcus: The the a

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Jake Marcus: yeah. Th. The Champlain Towers occurred in Florida which cause all the legislation to be pushed to that end, and it’s leaving homeowners and condos in a very precarious situation. Where they’re trying to navigate, how to get insurance, what they need to have done, making sure they’re making another issue actually is transient properties, which is a reason you can land on the list.

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Jake Marcus: Lot of people go down to Florida as kind of snowbirds or non residents, and that can. That’s a a a, a sneaky way that you can end up on the list. So all these issues are kind of occurring in Florida, but doesn’t mean they can’t won’t occur in other areas.

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Stephen Marcus: If if they renting out their units, it’s

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Stephen Marcus: short term. Then yeah. The snow. The snow snowbirds who are there for a while for a few weeks, but then it’s rental 14 days, and then it’s rental for the rest

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Stephen Marcus: short term rentals could could be yeah issues. But just to drive home to the point that it’s not

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Stephen Marcus: just Florida. I mentioned Montana earlier. When I started doing work in Montana, the first certificate of insurance I got from the National Insurance agent. at risk strategies it stayed on property limits.

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Stephen Marcus: Let’s say it was 30 million dollars it then said excludes Wildfire and I called up the my contact over strategies and said, how are you selling units? And my understanding is that they’re 10 and 20 and 30 million dollar units in Montana.

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Stephen Marcus: and as he says, the funniest thing.

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Stephen Marcus: I’ll get a call

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Stephen Marcus: after they receive the certificate of insurance hanging excludes basically fire in a wildfire country. And the Ca, the question will be, oh, we can’t do this long unless you increase the Fidelity insurance by $10,000, and they’ll totally miss and not read, that is, excludes fire. And

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Stephen Marcus: then, if you go to California, I’ve learned that Cai California has a task force policy. AI a wildfire task force but these are scary times when you’re concerned that

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Stephen Marcus: things such as fire can’t be insured and therefore the the lending is, gonna be very difficult.

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Stephen Marcus: I’m not sure the answer. Maybe there are enough people out there that can pay cash.

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Stephen Marcus: but that’s not the reality. Sam was circling back to Sam on affordable housing in my mind kind of many, and still are like in the large pot the last fashion of affordable housing. And it’s not 30 million dollar units. It’s the $300,000 units versus.

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Stephen Marcus: say 800,000 for a home and we have to sustain that. But we’re gonna need the Federal government grants lending to 2 associations for the 30 million dollars of repairs that have accrued over the 30 years that they’ve deferred maintenance. And then on my yeah, I thought, is that

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Stephen Marcus: Danny and Freddie will not take somebody off the unavailable List Technical Association of the unavailable list

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Stephen Marcus: until the repairs are completed. So let’s say that you get a structural inspection is 10 million dollars or repairs you get a bank such as Bristol Penalty Savings Bank, which will give 30 year loans or social bank, which I believe will do the same.

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Stephen Marcus: So you have loans in place. The engineers come in the attorneys review the contract. Everything’s in place. It’s gonna take a year year and a half for everything to be complete. Danny and Friday won’t buy the loans during that period, at least currently they they won’t to me, I think they should, and the argument to be made.

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Stephen Marcus: But I would think that you go to a local lender, whether it be Bristol County Savings Bank or Bank of America, and say, here’s what we have.

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Stephen Marcus: We have the money in place. We have the contracts in place. We have the engineers saying that this is sufficient funds to do everything. Can you warehouse these loans? Can you hold on to them and after the repairs are complete

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Stephen Marcus: you then, and turn around and sell them to Fannie Mae. But somebody reminded me of the day with paying

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Stephen Marcus: comes opportunity.

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Stephen Marcus: And unfortunately, this great pain in the marketplace on the kind of minimum issues we’re talking about the

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Stephen Marcus: today.

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Stephen Marcus: So I digress a lot. So Jake, do you? Wanna guess you and Sam wanna get us back on track.

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Stephen Marcus: Yeah, Sam, do you? Wanna yeah. Yeah. Hud actually has funds that they give to local jurisdictions for rehabilitating properties.

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Sam Chazanow: And it’s important to note that HUD, Fha and Va have not adopted these same critical repairs and structural items

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Sam Chazanow: documentation requirements. So we’re seeing a lot of loans that don’t currently qualify under these new guidance for Fannie and Freddie that will still be eligible for for Va and fha.

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Sam Chazanow: One important thing to note is construction, defect lit, because that was something that was raised before we used to see a lot of lawsuits filed to preserve. The Ho is right to sue where they didn’t really have details on true issues, but they still filed to preserve the right in case these issues did come up.

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Sam Chazanow: Both Fannie and Freddie are taking a hard line on this. So even though they settle the construction, defect issues anything that was alleged within the complaint, Fanny and Freddie now wanna see proof that that work has been completed before they will allow financing in those projects. So that that was a a recent change that is now impacted

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Sam Chazanow: prior to these new rules that went into effect. All we needed to show was that the litigation was settled. Now, if there was any alleged construction, defect, complaints, the agencies want to see proof that the critical repairs have actually been made.

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Stephen Marcus: and I hope our office is in the habit of filing lawsuits and assuming that maybe we’ll find defects after the after the case. But but I understand what’s happening, as something called the Statute of Repose, which Massachusetts is 6 years. Another State is 10 years, but after a certain period of time you sort of lose out all your rights. The case of these construction defect claims

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Stephen Marcus: something that’s totally off the wall. As a most of my comments. if legislation for the State by State or Federal

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Stephen Marcus: told.

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Stephen Marcus: stop the statute of repose from running

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Stephen Marcus: until such time

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Stephen Marcus: as the unit owners took control of the Condominium Association.

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Stephen Marcus: So that Associated so that you that associations didn’t have there. As soon as they become board members file a sounds like made up placeholder complaints. Say, I know it must be defects if the statute started running

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Stephen Marcus: after the turnover. Then maybe we would eliminate people. This is new news to me that I haven’t heard of the strategy of filing suits and just assuming maybe there are defects and Sam is giving great consequences for that. What would satisfy a lot of people, would they, if you told the statute from running so it didn’t run until it took control.

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Stephen Marcus: maybe they wouldn’t be attorneys filing placeholders suits which now, if you find it doesn’t. The association and the manager and the attorney have to say to the unit owners that this could impair your ability to sell you, you know, to refinance.

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Stephen Marcus: What not? Based on that reaction.

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Jake Marcus: You left me speechless, crazy.

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Stephen Marcus: good point

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Sam Chazanow: on another episode. We should really delve into transient financing and the rules that that change, because that’s an impactful. Not only does that prevent

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Sam Chazanow: financing of new units, but refinancing

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Sam Chazanow: anybody that has a mortgage in there, and is now determined to be a transient in nature. Project is barred from getting refinancing through Fannie and Freddie

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Sam Chazanow: major impacts.

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Sam Chazanow: And that holds true to even

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Sam Chazanow: properties that are eligible for waived reviews, such as 2 to 4 units and detached units we now have to review for transit components for both Fannie and Freddie.

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Sam Chazanow: So that’s a whole topic, especially if you’re in the resort areas like Florida, North Carolina, South Carolina, or or even the Rockies.

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Sam Chazanow: Florida is the highest on the list at about 34

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Jake Marcus: as far as what comprises the list. South Carolina is well, South Carolina is third, California. Second.

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Jake Marcus: California is about 10%

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Stephen Marcus: South Carolina is about 4%. So I found that interesting. I think it hits on the what you mentioned the tropic areas. Now I’m gonna ask them. I’m gonna put Sam on the spot. But it’s a question that is probably something they don’t do. Currently. But my question is gonna be, is it something I would consider. So I test upon briefly these loans

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Stephen Marcus: that a handful of lenders given each State 2 condominium associations is based on a future the future condominium phase.

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Stephen Marcus: and it’s secured by Article 9 Ucc. File line file of the Secretary of State.

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Stephen Marcus: I mentioned that personal county Savings Bank and South Shore bank to 25 and 30 year loans. And they’re the dollar amounts are becoming more and more and more

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Stephen Marcus: is this something that either movement or the lenders that movement works with with

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Stephen Marcus: would be willing to sit down with us to discuss

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Stephen Marcus: how they work. Or are you fine with what you’re currently doing and not looking for a new idea?

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Sam Chazanow: Well, we are always looking for new ideas, new opportunities. And we’re actually owned by a foundation. So we do a lot of amazing work in terms of affordable housing and creating opportunities. We have

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Sam Chazanow: special on departments that work for certain ethnic communities, the Latino communities. So anything that we can do to help promote home ownership and workout issues. I’m sure our Ops would be interested in discussing. So to that point I would say, prepare

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Sam Chazanow: synopsis of what you would be interested in, and let me float it up to the powers to be.

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Stephen Marcus: and I’m sure that’s something Tess and I can can get looked at for you. Yeah. And and the 2 things I’ll say is one. I just thought of that question 3 min ago. So like most of my ideas, maybe it’s crazy. But I think there’s an opportunity there

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Stephen Marcus: to the deep hidden secret is.

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Stephen Marcus: and my numbers could be wrong. But these loans have been given to associations without any real estate for the past 40 years, started in California and move move east.

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Stephen Marcus: To the best of my knowledge, in the 40 years there have been 2 loans, both in Miami, both with the same developer both of which every other lender in the United States said, well, we never would have given the loan based on the high investor ownership and that it was still developer control.

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Stephen Marcus: But I think we could make a compelling case that the loans are good. But I would have trouble keeping in tune with what I’m supposed to be doing for for business. So if you’re willing, but II yeah, I like dreaming and thinking. And yeah, it would be an invaluable service.

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Stephen Marcus: Because what do you do if host sampling towers out, you get a 30 million dollar structural inspection.

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Stephen Marcus: and you don’t. You can’t assess the units upfront for 200,000 to 300,000 each. So I love the idea that you’re willing to to discuss it. I wasn’t looking for a firm written commitment. I won’t need that until tomorrow

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Stephen Marcus: now has a reserve study public policy that everybody should look@atcionline.org in a maintenance

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Stephen Marcus: booklet that they came out with this year. And as

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Stephen Marcus: not only is flower doing, getting into reserve studies that now include structural inspections that may include facade inspections, but New Jersey is looking at, and other states are looking at it and some associations. They’re just doing it because the being told to do it. I think that

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Stephen Marcus: people are, gonna find that there are substantial amounts that would be very difficult if kind of minimal last passion of affordable housing for somebody to get a bill for $300,000 and pay at the next within the next 2 weeks to the to the Association. So we’d love to keep that for

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Stephen Marcus: further discussion. Sorry for throwing that at you. But it seems like you’re a a pretty innovative company so look forward to having those future discussions.

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Stephen Marcus: Thank you. We’re 5 min past that time. So we did good. We’re usually 10 min past.

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Jake Marcus: yeah, no. And definitely, I mean, in the meantime.

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Jake Marcus: go to our website am condolodcom. And I just I just put in the chat the the full, Fanny may blacklist resource that we have. It’s a good way to check if you are on the list. If you are unit owner, board member

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Jake Marcus: or property manager to check on your properties.

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Stephen Marcus: But yeah, we we got. We did get some questions as well. I think what I think we answer some of them. Here’s what we’ll do if you act now in addition to again. Zoom cutting knife

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Stephen Marcus: in 3 next week Jake’s gonna cut and pay

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Stephen Marcus: the link study posted and the QA. Questions

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Stephen Marcus: next week

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Stephen Marcus: we are. Gonna send you a follow up to all people who registered for the program.

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Stephen Marcus: answers to the questions that were asked in the chat and that were pre submitted prior to this program.

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Stephen Marcus: And a couple of articles from Boston Globe and the Florida Sun Sentinel about the family. And Freddie, yeah, Mac Blacklist, becoming more transparent and open.

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Stephen Marcus: And if Sam has any materials that he would like to that he thinks would be educational to the registrants for this program we could do that as well, and we’ll send you the Powerpoint.

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Stephen Marcus: So you have that? Yeah, save II guess my final 2 questions. Are

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Stephen Marcus: you have any topics that you want to hear about? So please type them in that couple of minutes into the QA. And are you finding? Jake said, this is our eleventh webinar. Are you finding these webinars and the topics to be helpful useless or anywhere in between. We’d love to hear that.

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Stephen Marcus: And on the last screen Sam’s name is not same

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Stephen Marcus: but auto, correct. Yeah. Thought, it made more sense so you now have Sam’s contact information and that learned a whole lot from from him today and turn the last few weeks of preparing for this.

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Stephen Marcus: And I always learn a lot from my best friend Jake.

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Stephen Marcus: So we did expect to have Taylor Swift, that is, to make a special guest appearance. But it was a birthday 2 days ago, so she was busy. I was busy Jake said. He doesn’t like her. What’s all the fuss we hope you have a great weekend and we wish you a happy holidays. A merry Christmas

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Stephen Marcus: and a healthy and happy 2024 let’s hope for good things in 2024. Thank you all. we’ll see you next month on the January hour. Thank you, Sam.

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Jake Marcus: Happy holidays to all Taylor Swift will be at Gillette Stadium on Sunday, where the patriots play the Kansas City chiefs and her new boyfriend, Travis Kelsey.

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Stephen Marcus: and and I would think that if you and I are there and Taylor Swift. they’ll clearly sell out

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Stephen Marcus: alright enough of my bad humor.

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Stephen Marcus: Alright, thanks everyone. Thanks.

 

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