Fannie Mae waiver for a co-op

A waiver usually requires some level of collaboration between the managing agent and a lender. The managing agent provides the pertinent information. The lender conducts the actual dialogue with Fannie, since it is the lender who will originate the loans and deliver/sell them to Fannie.

Your mortgage broker is an intermediary between you and the lender, not between the lender and FNMA. The broker can facilitate, persuade, cajole, beg and act as go-fer; but he/she isn't a principal in the waiver process.

We needed to get a Fannie Mae waiver for our mortgage because we were buying into a small co-op where several units have > 10% share. Our mortgage broker was able to get the waiver quickly, painlessly, and without any direct charge because he knew the right people to call.

Your situation may be more complicated, however. Mortgage waiver aside, I would be considered buying into a building that is only 50% owner occupied. Refinancing the building's underlying debt could be difficult, as could selling if the owner occupancy falls any lower. How many units are unsold? Of the rentals, are any rent controlled and does the rent cover the maintenance? What is the current sublet policy? Do the original leaseholders have unrestricted subletting rights?

The answers to all of these questions may have impact on the VALUE of the apartment, as well as on your ability to get a mortgage. Make sure you get a good lawyer who will "tell it like it is." Unless the co-op is taking steps to improve the owner-occupancy, I think I'd walk for a number of reasons, financial and otherwise.

Sorry, that should say "I would be CONCERNED buying into a building that is only 50% owner occupied."

newbie - it shouldnt be too difficult to get a fannie mae waiver on the owner occupancy being 50%. As long as the financials, budet, insurance are in order then, it should be no problem. And if youre buying a unit that isnt owner occupied then the waiver should be a sure thing because you would obviously be increasing the owner occupancy. sunny.hong@bankofamerica.com

Thank you all very much for your answers.

lad – we are concerned about owner occupancy as well… 20% of the units are still owned by the sponsor and rented out, but we don’t know if the tenants are rent controlled and if the rent covers the maintenance (it seems hard to get these answers before having an accepted offer). The listing broker told us that the co-op board was talking about making renting less attractive (imposing a fee), but it’s impossible to tell whether that’s likely to cause an actual change (and whether it’s even true); some of this we should be able to learn from the board minutes if we go ahead and make an offer and then are able to get access to the minutes…

newbie_buyer - Did you have any luck getting this waiver? Any tips for someone in the (exact)
same position?