My wife and I are looking to finally buy something small in Tucson, AZ, now that we live here. Anything decent is $150,000 and up, but we just saw what we thought were condos for $35,000. They are nice and just the size we need, but they are actually co-op units. They tell us they cannot be financed, which may be okay, but then the monthly dues are $236 - very high compared to condos in the area. This used to cover the mortgage on the whole complex, but this was paid off last month.
The realtor we talked to seemed confused on the whole issue, and we aren’t sure if the monthly dues will go down soon. Seems like a good investment, but I have no experience with co-ops. Any suggestions, or experience to relate?
The dues cover insurance, maintenance, taxes, etc (even gas, although heating costs here in Tucson aren’t much anyhow).
Two realtors and the woman that runs the place (The office manager, not the board of directors) say they can’t be financed. Will banks do a mortgage loan on shares in a corporation, when to even foreclose on those shares the co-op board would have to approve (since they approve any ownership transfers)?
* The property that secures our first lien may be a cooperative unit that is represented by shares, stock, a membership certificate, or other contractual agreement in a cooperative housing corporation.
* A cooperative share loan finances the purchase (or refinancing) of the borrower's ownership interest and the accompanying occupancy rights in a cooperative housing corporation. It is secured by an assignment of an occupancy agreement and a pledge of cooperative shares.
* A cooperative share loan must be a lien that has priority over all other liens against the borrower's interest in the property, except that the lien may be subordinated to:
o that portion of the cooperative corporation's lien against the tenant-stockholder's shares for unpaid assessments that represents the pro rata share of the cooperative corporation's payments for the blanket mortgage, the current year's real estate taxes, and any special assessments. (The pro rata share of the project debt that is related to the cooperative share loan cannot exceed 30% of the sum of the related pro rata share of the project debt and the appraised equity interest value of the shares.); or
o any assignment of rents or maintenance expenses in any mortgage or deed of trust that is secured by the cooperative project or in any Regulatory Agreement entered into by the cooperative corporation and the Secretary of HUD as a condition for obtaining HUD mortgage insurance.
* Refer to online manual for complete eligibility criteria.
Eligible Cooperative Projects
* All Cooperative projects must meet FNMA eligibility criteria.
* In order for a cooperative share loan to be eligible for delivery to us, the cooperative project in which the secured unit is located must qualify as a "cooperative housing corporation" under Section 216 of the Internal Revenue Service Code. The cooperative corporation must provide the lender with a statement about the project's compliance with Section 216 of the Code.
o If the cooperative project does not meet Section 216 requirements, we will not purchase a cooperative share loan from within the project.
o A cooperative housing project must be designed principally for residential use and must consist of five or more units.
o It must be located in an area that has a demonstrated market acceptance for the cooperative form of ownership.
o The project may be owned in fee simple.
o The blanket project mortgage may be a market-rate FHA-insured mortgage or a conventional mortgage.
o We purchase or securitize cooperative share loans regardless of whether we own the blanket mortgage.
o However, if we own an interest in the blanket cooperative project mortgage, the maximum mortgage amount that would otherwise be available for a cooperative share loan from that project must be reduced by the portion of the unpaid principal balance of the blanket mortgage that is attributable to the share loan.
* A conventional cooperative project must meet the project requirements.
o We will not purchase or securitize a cooperative share loan if the cooperative project is one of the types of ineligible projects, regardless of the characteristics of the share loan (unless the lender's lead Fannie Mae regional office agrees in advance to accept share loans from the project on a case-by-case basis).
o The project may be newly constructed or the conversion of an existing building to a cooperative project.
o In addition, all construction and rehabilitation for the project must be completed before we purchase or securitize the share loan, unless the lender's lead Fannie Mae regional office approves delivery at an earlier date.
Refer to online manual for complete eligibility criteria.
I am curious are these co-op units like condos or is this like mobile homes? This has just got my curiousity since I have not seen co-ops before. Also, you said they paid of their mortgage. How old is this place? $200+ is very high for condo fees. There are a few condo complexes that charge that here in vegas. The ones I have seen have tons of landscaping so I think that’s where the extra money goes or else someone is getting ripped off!
They are nice apartments (not mobiles), and I don’t know why the monthly fees are so high. The buildings were built in 1964.
Obviously, they were wrong about financing co-ops, so now I wonder if it is just THIS co-op that can’t be financed for some reason (that fnma list has a lot of conditions), and why?
The fact that they are selling for 1/3 of what they would sell for as condos makes me suspicious. It seems difficult to get answers from the office manager. “Things cost more than people realize,” was her answer to the high monthly dues. They do include taxes, insurance, and a swimming pool, etc. Time to dig deeper, I guess.
Well, I can say this, if it was built in 1964 they are pretty old. I would certainly inspect the condition. A lot of the condos that get that old have lots of problems with leaky roofs. We are lucky that we don’t get so much rain in this part of the country but we still get it.
If you look on the internet, they were having lots of trouble with leaky condos up in Vancouver. Of course, they do get a lot more rain than us. Usually, by the time regular apartments get this old they bulldoze them and build something new. Now, don’t let me scare you away, this could be a great place for the price but beware of all the problems that could exist.