Condo Terms Glossary A- G

Stephanie Diana Gast- Wilson

 

It is understandable that since Condo underwriting is such a specialty skill that many terms and jargon are lost on those who invest or work within the industry and do not deal with condos on a daily bases.  So, this is a first part series of condo glossary terms.  This article will cover terms A- H.

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    • A
      • Asbestos
        • Asbestos which you can find information on what it is https://www.asbestos.com/asbestos/ .  In layman’s’ terms , it is a material used in construction to resist fire damage.  However, it can cause cancer among other issues as well when it becomes powderized and in the air.  It is good to note where asbestos is present the appraiser must note it and give an opinion on how hazardous the exposure is based on a building standpoint.  From a condo standpoint based on current agency underwriting guidelines a stage 2 environmental hazard assessment must be done and an asbestos report must be obtained.  Also be sure to check and see if the HOA is under any sort of litigation due to this condition in the project and if there has been any abatement.  

 

  • See FNMA seller guide section B4-2.1-03 through -05, Environmental Hazard Assessments.  

 

    • Assessment
      • The word assessment is another way of describing the HOA dues charged to the unit owners for the upkeep of the property.  
    • Appraisal
      • A report that assesses the value and condition of a property.  Please note that a condo appraisal is on a 1040D form.  Also, verify that it is not subject to or on legal- non conforming land.
    • Apartment
      • The use of the word apartment can indicate in certain states the styling of the condo meaning one unit above another.  This can also be used as nomenclature for a condo unit in the title, legal docs and HOA cert.  However, this term can also refer to apartment style rental units on the project that are part of the commercial space.
  • B
    • Budget
      • An estimate of income and expenditures over a period of time.  With regard to condos the time period tends to be financial year or annually.  Reviewers should verify when the budget expires.
        • See the budget review guidelines per agencies under full review requirements.  Also, note that 2-4 unit projects have a different set of guidelines regarding budgets.
    • Building
      • This word is often used to describe the structure the unit is located in.  Building or buildings can also describe different physical or legal phases.  See guidelines on legal phasing and new construction projects.
    • Boilers and boiler insurance
      • See mechanical breakdown but a boiler is a mechanism that heats a home much like a heater/ water heater.  
  • C
    • Construction
      • Construction or New Construction can relate to if the project meets established guidelines.  This can also be a term regarding defects or repairs that are going on within the building.  
    • Conversion
      • Conversion is when the building is either gutted in a full or part from one type of building to another.  Some conversations are in legal description alone.  An example would be from apartment complex to condo.  Please note that FHLMC guidelines require for a project that was converted in any capacity to be considered established must have had the conversion completed at least five years before the date of underwrite and three years for FNMA.
    • Condo
      • A condo is a legal description of a property type like a manufactured home or single family residence.  This is not to be confused with the property style being apartment style or townhouse style.  (See article on PUDs and Townhouses).  
  • D
    • DU
      • DU is an acronym for Desktop Underwriter which is the program used to do the initial underwrite for FNMA.  This document regarding condo compliance underwriting first of all details what the loan product type is such as conventional, FHA, VA, USDA or a Bond loan.  Also this will note the occupancy type and the loan to value ratio otherwise known as LTV.
    • Deed Restriction
      • Deed restrictions are private agreements that restrict the use of the real estate in some way, and are listed in the deed. The seller may add a restriction to the title of the property. Often, developers restrict the parcels of property in a development to maintain a certain amount of uniformity.
    • Deed In Lieu
      • A deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.
  • E
    • Established Condo Project.  This is a condo project that meets FNMA’s guidelines for type S review.  Current guidelines define an Established project as a project with 90% or more of the project sold and conveyed, complete and not subject to additional phasing or construction, all common areas are completed and the HOA has taken control of the project from the developer.  
    • Equipment breakdown/ Mechanical Insurance has to do with a coverage clause on the HOI insurance for common area equipment.  Such as boilers,
  • F
    • Fee simple
      • Fee simple is a permanent and absolute tenure of an estate in land with freedom to dispose of it at will, especially in full fee simple absolute a freehold tenure, which is the main type of land ownership.
    • Flood cert
      • A Flood cert or flood certification in real estate is a document that states the flood zone status of real property. … If it is in a flood zone, federal flood insurance is required.
    • Foreclosure
      • the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.  AS a condo specialist this can be a guideline issue if the HOA is requiring more than 6 months of past HOA dues and if this is in line with the state’s condo laws
  • G
    • Ground Lease
      • Ground lease also known as a LeaseHold, or Ground Rent is an agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.  See guidelines for information on the review of ground leases.

Glossary Dictionary Definition

These are some of the main terms that need more clarification normally in my day to day.  Shoot an email or a tweet if you know more terms related to condo underwriting for A-H.  Remember sharing is caring so feel free to share this post.

Site Vs. Detached Condos

By: Stephanie Diana Wilson

Site Condos have always been a tricky subject particularly regarding USDA and FHA loans. However, conventional guidelines have changed recently providing lenders more clarity on the difference between a Site Condo and a Detached Condo. And before it is asked yes this post is an extension to last week’s topic post on “It Is Not a Condo It’s a Townhouse”. Much like the confusion between Planned Unit Developments or PUDs and the various styles of condo units the style of detached condos which look a lot like a detached PUD within a sub division can look a lot like a Single-Family Home or SFR.

Now before we start on this journey our normal CYOB moment. As a reminder guidelines change frequently and we are talking about guidelines posted online at the time of writing this article. If you have more in-depth questions be sure to contact your local mortgage loan officer or underwriting professional. Now that’s out of the way let us move on back to the topic at hand.

The issue becomes when the title shows that your subject unit is in fact a condo in a condo project is it detached or not. Normally an appraisal will show pictures but; I must admit sometimes it is hard to tell in the pictures. So, my advice to underwriters is never be afraid to ask the appraiser to verify if your subject unit is 100% detached. Once it has been defined as both condo and if it is attached or detached the next big question to ask is if the unit is a detached unit in a project of detached units or is this a detached unit in a project that has both attached and detached units?

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Then we move on to trying to define if the unit is a site condo or a detached condo. Now Fannie Mae (FNMA) has made a list of defining factors that a site condo must meet. This info can be foud on the FNMA guidelines dated 3/28/17 at https://www.fanniemae.com/content/guide/sel032817.pdf on page 763.

Site Condo Definition A site condo is a detached condo unit in a condo project that meets all of the following:

• Project consists of all single-family detached units where the unit owners own the land and the improvements on the land.

• Project has minimal common elements, which may include project signage and limited undeveloped green space.

• Project does not own any common amenities including, but not limited to, swimming pool, fitness or recreational facility, playground, laundry facility, or clubhouse.

• Project does not own or have responsibility for maintaining its own infrastructure such as roads, street signage, electricity, water and sewage, snow removal, or garbage disposal.

• Project has minimal or no involvement with a homeowners’ association, including no or little

dues; no special assessments; and no road, amenity, or common element maintenance.

• Unit owners are required, per the condo legal documents, to carry their own individual hazard and other applicable insurance coverage, which may include flood and liability insurance. – (Fannie Mae seller guide dated 3/28/17)

Now part of the reason that the defining the difference between a detached condo and a site condo is because they are underwritten differently. Detached condos that do not meet all the above noted items to be defined as a site condo are underwritten as a condo through limited review. Detached condos per the current guidelines do not limit the ability to do detached units based on Loan To Value ratios or LTV. Which we have discussed in other articles. So, regardless of the LTV detached condos are currently underwritten as a limited review.

Now much like a PUD site condos do not require condo review process. Also, like a PUD a site condo is underwritten like an SFR. However, the current guidelines require that lenders must verify more info. Page 764 of the Fannie Mae guidelines updated 3/28/17 found online at https://www.fanniemae.com/content/guide/sel032817.pdf reads:

For site condos that meet all the criteria listed above, a project review is not required. Instead, lenders must confirm the following requirements are met:

• The project follows Fannie Mae’s requirements for priority of common expense assessments;

• The project is following Fannie Mae’s requirements for projects located on land zoned as legal, non-conforming land use; and

• The appraisal, completed using either Form 1004 or Form 1073, must confirm the local market treats units in such a project as comparable to owning a unit in a single-family detached housing development that has not been organized as a condo.

Hopefully this info has helped you. Remember sharing is caring so share the article. Also, you can find me on twitter at @sdgwwgds and on facebook just search condo land blog. If you have questions or topics you would like address send us a message or comment at facebook or twitter.

It’s A Townhouse NOT a Condo?

By: Stephanie Diana Wilson

 

Now this is a phase I have had to explain over and over drives me nut.  It drives me nuts when sales reps and branches try to tell me a subject unit is, “it’s a townhouse not a condo”.  Which is a common statement in DC and Colorado where there are townhouse style condos going up and attached PUD’s.  This is a common misconception as townhouses are a style of condo.  Often what the person wants to say is the unit isn’t a condo the subject unit is an attached Planned Unit Development or PUD.

 

The first issue is that many don’t really know what a condo is exactly.  A Condo much like a Single Family Home (SFR), Modular Housing, Manufactured Housing, Planned Unit Development (PUD) is a legal description of a property.  Where row, townhouse, garden, high rise, etc are styles of properties.  The legal description for a condo in short is a property where each unit owner owns their unit with an undivided percentage of ownership of the whole property.  
Now it is true that one style of condo is a lot like an apartment where there is a person living right above each other.  However, the styles differ greatly in fact there are styles of condos called detached and site condos which are much like a single family home or SFR within a condo complex.

Low Income Retirement Condos or Complex

There are also condo projects that are townhouse style where there is an up and a downstairs level inside the unit.  Also where a unit might be single story like an SFR or cottage like.

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Now a PUD is a horse of a different color.  PUD’s are a planned unit within a subdivision which can have mixed use land within.  A great example from popular culture is in the movie Poltergeist the homes are PUDs within a sub division.  Course that also can take us on the topic of track homes which is a topic for another day.  The difference further in a PUD from a Condo is how they are underwritten.  As a PUD legally is defined much like a house so it it underwritten much like an SFR.  A Condo on the other hand is more involved because the financial implications an HOA can create as a risk factor for underwriting.  

 

To avoid incorrect underwriting always look at the legal description which is most easily found on the title.   Usually condos in a legal description state the word condo or note a percentage undivided interests.  I have never seen a legal description as a townhouse.  So, the moral of the story is alway read the title report.  It can save on underwriting issues, wrong appraisals and other additional costs change in property type can cause late in a loan.  And know there is no such thing as a property type called townhouse.  But there is a condo style called townhouse.  
If this article helped you remember sharing is caring.  Also don’t be shy leave a comment on topics you want covered regarding condos.  

Florida the Sunshine State with Different Condo Rules

By: Stephanie Diana Wilson

Based on questions I have been getting not just at work but; from other friends who work in the mortgage field a blog post on Florida Condo Underwriting guidelines since they differ greatly from condos anywhere else in the country. Or as one of my friends in the mortgage industry says, “OK it is time that we have a coming to Jesus on this topic.

Now for our usual CYOB (Cover Your Own Behind) please be sure to check with your lender or realtor professional to verify any updates to the guidelines or how the guidelines may affect your individual circumstances. Remember always consult your local Real Estate professional or Underwriter.

With that out of the way let’s discuss Condos in Florida. Florida’s real estate market has been hit really hard not only by climate change but also by the financial crisis of 2008. Only now is the state of Florida starting to come out of the abyss. And only now are the HOA’s starting to run their projects in line with the idea in mind that they need to make their projects saleable to lending agencies.

However, as Condos are a great and smart investment for borrowers they can be a risky investment for lenders. If the project is not running properly financially or keeping up with repairs at best lenders have a marketability issue in the event of foreclosure at worse they have a safety issue making the project non saleable. Because of this lending agencies have installed underwriting guideline rules on Loan To Value Ratios (LTV) that are different in Florida compared to the rest of the country.

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Credit to below picture to Florida-Condos.jpg (1000×750)

 

First let’s clarify what LTV is exactly. LTV or again Loan To Value ratio in a nut shell is the amount of deposit that is brought in and the total ratio it is to the total value of the loan. So, if a borrower comes in with a 10% down payment that means the loan has a 90% LTV as 10% of the total value was brought in by the borrower. Another example is where a borrower comes in with 3% down on a down payment assistance plan (like here in California we have CALHFA) which calculates to an LTV of 97%. Basically; the higher the down payment on a loan, the lower the LTV is on the subject loan.

All this being said the max LTV’s for limited review on established projects are as follows in Florida:

Occupancy type Max LTV

Owner Occupied unit

75%

2ND Home

70%

Investor / rental

Not eligible for limited review

The rest of the country’s LTV guidelines requirements for established projects are as follows:

Occupancy type Max LTV

Owner Occupied unit

90%

2ND Home

75%

Investor / rental

Not eligible for limited review

So, in Florida a higher deposit is required in order to do a limited review. Now a limited review is done on established attached projects. We can tackle the topic of detached vs. site condos another day. We will also tackle further in another article about new construction in Florida. But, lets cover what a limited review is and why it is important that a higher deposit is required in Florida to do said review.

A limited review on an established project is a brief look at the project as certain things are not asked on the short form used for limited review. You can find Fannie Mae’s full review/ long form, and limited review/ short form standardized HOA cert at https://www.fanniemae.com/singlefamily/project-eligibility . One of the questions not asked on a short form is how many units are delinquent in HOA dues 60+ days and items like how many units are rental units and second homes? These are considered lower risk because the borrower came in with more down payment.

Full review on an established project includes how many units are in the project, investor concentration, etc. Also, the full review includes a review on the budget which includes making sure the HOA is not spending more than they are making. Also, the budget review includes an analysis of if the HOA is allocating 10% of the total dues to reserves and if not is the HOA following a reserve study that meets guideline requirements or not? It can be more involved and the HOA may or may not be following guidelines. Also, the amount of delinquencies in the project could also create an issue as agency guidelines require no more than 15% delinquency otherwise a PEW waiver may be need. Creating an added risk on a loan with a lower deposit.

Now the reason that this is a “Coming to Jesus” topic is that these LTV guidelines are based on the location of the subject unit not the location of the lender or broker’s office. Unfortunately, this can cause confusion for the loan originators. So, there should be emphasis for loan originators who do loans in Florida even when they are located outside of Florida reviewing the guidelines regarding geographical location and LTV in the guidelines. Not only will this help to prepare the borrower for what info will be pulled but also help to properly plan for how long it will take to get the loan cleared. Florida is still a Condo Land but; to underwrite there you got to remember the LTV guidelines.

If this article helped you remember sharing is caring. Also, feel free to suggest Condo questions you want to see addressed.

​Standing Rock and How Completion Will Hurt Condo Loans

By: Stephanie Diana Wilson
Normally this blog is socially and politically neutral but; the topic of protecting water and environment is near and dear to me.  The topic of environment also has the possibility to hurt not only mine and much of the US economy’s bottom line and the future health and financial well fare of the children who will become future home buyers.  Lets for a moment forget about the financial facts that more money is there to be made and more jobs can be created by the use of green tech and alternative energy resources such as solar and wind.  Ignoring these facts but paying attention to the facts that oil spills, can cause water and soil contamination.  

The reason I bring this up is because all the major lending agencies have very strict guidelines regarding environmental hazards within land that condos and single family homes.  This blogs focus is in condo guidelines and it could cause a project to become unwarrantable.  As we have noted on numerous occasions always check with your mortgage advisor and underwriter with questions on specific properties.  However, if we look online at Fannie Mae’s underwriting guidelines (keep in mind that the guidelines change frequently and again check with your underwriter) environmental hazards can be researched in section B4-2.1-03, 04, and 05.  This can be seen on the Fannie Mae guidelines online at https://www.fanniemae.com/content/guide/selling/index.html.  

In the underwriting guidelines it details everything from legally acceptable amounts of radon and other soil contamination, water contamination and seismic issues.  However, even if a lender’s condo department does not catch these issues the news advertising an environmental hazard will drop appraisal values.  This was observed during the gas leak in Porter Ranch, California.  The LA times wrote an article in April about how the gas leak had dropped home values in that area.  The article can be seen online at http://www.latimes.com/business/realestate/la-fi-porter-ranch-sales-20160406-story.html.  Even before these Porter Ranch loans of any kind came to underwriting many lenders may have been cautious about doing loans there because of the underwriting issues that come with environmental hazards.  

Another example of environmental hazards hurting the real estate market is Flint Michigan.  Michigan was hit hard as a whole state after the financial crisis of 2008.  Now that the city has been without clean drinking water since 2014 the housing prices have dropped to around $14k!  CNN documented how the people in that community have been hurting with the financial crisis that the water contamination has caused.  Please see link to CNN’s article at http://money.cnn.com/2016/03/04/real_estate/flint-housing-water-crisis/.  Many residences cannot move because, they can’t sell their home to afford to move.  Which is causing a real estate crisis throughout the country as more pipelines are being pushed through despite a stop ordered by the US government.  

At Standing Rock which are trying to protect not just the land that the pipeline is being built which is actively used native burial grounds but; the river that supplies water to the local reservation. There the Water Protectors are protesting the possibility that a pipeline might rupture.  Unlike in Lycoming County Pennsylvania where they have recently had a pipeline burst.   NPR wrote an article when it happened https://stateimpact.npr.org/pennsylvania/2016/10/21/sunoco-gas-pipeline-ruptures-in-lycoming-county/.  Also we cannot forget how New Orleans and Texas suffered during the oil spills in 2010 and how it harmed their housing prices as well.  https://www.clearcapital.com/newsroom/press-releases/clear-capital-impact-of-bp-oil-spill-reaches-beyond-gulf-coast/.   

This comes as more pipelines are being built across the country and as reports come in not stopping in North Dakota even though the government has halted their approval of the project on the land.    Even though using the Bush concept of asking for forgiveness being easier than permission has been showing not to be the case.  Going against the wishes of the native people has cost the NDPL reps more money than expected and brought to light the issues they are causing around the country.  

Although the issue of property values dropping due to environmental hazards is being published and this is being done across disciplines.  Such as the US National Library of Medicine published an article on home prices that have been effected by plants being opened or closed near properties.  https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4847734/. There is even an article on Jstor.org from the University of Wisconsin Press on how the building of pipelines has hurt property values.  https://www.jstor.org/stable/27647732?seq=1#page_scan_tab_contents. You can also find the same article at http://le.uwpress.org/content/82/4/529.short.  Some environmental hazards can be abated or monitored to fit within agency guidelines.  Such as the information detailed in one of my earlier blog posts on Meth being the new four letter word in mortgage.  Though in the case of an oil spill not only does it cause a issue with housing prices and value but for gas prices.  https://insideclimatenews.org/news/20131125/neighborhood-shattered-families-emptying-out-oil-hit-arkansas-town.  

With all the homes and condos all along the Mississippi the construction of pipelines throughout the country is becoming costly to the American People and the businesses that sponsor them.  The Department of Energy in the US has a website for people to find all the wonderful jobs in green energy including those in the labor and construction aspects of the industry.  Links to that info can be found at https://energy.gov/eere/education/clean-energy-jobs-and-career-planning.  

I get this is a highly political issue regarding treating and social economical discrimination and racial discrimination along with corporate and governmental corruption.  But, if all parties sit down and see how these actions are hurting both the American Dream of home ownership and the financial stability of the nation and its real estate industry which ends up hurting everyone’s pocket books change can be attained.  These companies investing in green energy instead of oil will increase their profits, put them in line with the rest of the world which is going or has already gone totally green.  It would also starve a potential national financial collapse by not polluting soil and ground water causing numerous homes property values to plummet.  This ability to plan ahead and adapt to an ever changing world is what made America great in the first place.  If we want to keep America great investments need to be shifted to account for geo political changes and environmental changes.   This will create jobs and raise the real estate values and the financial industry as a whole.  All parties need to look at this issue much like financial planning for a child while planning a will for ourselves.  We want to make sure we leave our kids with a sound financial footing and room for them to grow that way as well.  Our children and the economy cannot thrive if we have unrest and massive pollutants hindering financial and physical growth.   

​Is Commission The Best Payment System for Loan Originators?

By: Stephanie Diana Gast- Wilson

So, to give some back story to the topic noted in the title.  I am taking an HR Human Behavior course within my Master’s program.  The term long case study we are examining is a company that used a Scanlon bonus pay plan to encourage morale long term and if this was shooting the company in the foot and if so what behavioral plan would you put in place to get the company back on track?  Of course my plan is to use six sigma cross training to not only develop appreciation at all levels for what each employee contributes but it empowers the employee by making them feel invested in and developing additional transferable skills should they be laid off.  Also allowing the company to be able to run lean with a skeleton crew if needed and find other cost saving strategies through entire company collaboration.  


However, when doing the research I found that studies since the 90’s show that bonus and commission pay plans are meant to be temporary quick morale boosters and tools for startups to keep costs down till the company can have a salary and hourly system put in place as they gain money.    According to an article in the Harvard Business Review there is a direct statistical link between quality falling and incentive plan pay systems.  You can find the article written by Alfie Kohn at  https://hbr.org/1993/09/why-incentive-plans-cannot-work.   Even the Society of Human Resource Management has an article from 2012 on the pitfalls the incentive pay plans have within the view point of HR and the employee/ work force behavior. The article can be found online at https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/incentivetips.aspx.
This got me thinking with all the issues that the mortgage industry has had and now the push for quality control and compliance focus why is the mortgage industry still paying sales people commission and no base?  I work with sales people all day long trying to help them navigate the underwriting guidelines with regard to condos.  

What many may or may not know Realtors, Loan Originators, Loan Officers, Account Executives, Account Managers, Sellers Agents, Brokers Mortgage Loan Officers, etc., are the sales force in mortgage and they are only paid based on a percentage of the loan that is being taken out.  Investopedia has a great article that details the way that sales people in this industry are paid. 

“Loan officers get paid in a way that they call “on the front” and/or “on the back.” If a loan officer makes money on the front, that means they are charging for things that you can see. This money is either out-of-pocket or is incorporated into the loan when you sign the papers. These are things like processing fees and other miscellaneous charges that are charged for processing your loan. If a loan officer makes money on the back that means money is being received from the bank as a sort of commission for filing the loan.”  

You can read more on this article at http://www.investopedia.com/articles/pf/lending-loan-officers-perspective.asp.  Also you can get more info on a similar article by Forbes.com at http://www.forbes.com/sites/learnvest/2013/07/17/secrets-of-a-mortgage-loan-officer/#681157e839c0.

So, since studies show that quality takes a hit when sales people are paid in an incentive based pay plan why do we keep using that same system in this industry?  Right now every lender in the country is looking for sales reps and coming up empty because of a number of reasons.  Some reason I hear from those I know who have left the industry include are numerous but the root is the pay scale and how the compliance focus has made the job even harder for sales people.  When really it is only harder because, the pay plan is set up for quantity over quality while demanding higher quality.  Which is absurd when you think about this issue with a global view within the Business Administrative and Operations Management scope.  
Another thing that many who do not work in the academic aspects of mortgage may or may not know is that the risk assessment model that the mortgage industry has been using until 2010 was the same one used since 1945. In the risk model developed for mortgage post World War II it viewed mortgage loans as a win, win for the lender.  The reason it was seen this way is if the borrower defaulted then the bank got the property back and could sell it off again. Which led to the development of lending products that created a potential for subprime issues.  However, as we all saw in 2008 that isn’t always a win, win in the event the whole company has a financial collapse.  There is a great working paper written by Robert Ban Order at the Stephen M. Ross School of Business at the University of Michigan which can be found at https://deepblue.lib.umich.edu/bitstream/handle/2027.42/55317/1086-VanOrder.pdf?sequence=1&isAllowed=y .  The scholarly article not only breaks down the history but also the math.  (Which again is why I feel mortgage should be pushed as a career path at the college level and looked at as a STEM field.)  We often forget about the detailed math and science that goes into developing the guidelines and risk analysis in mortgage.

Which brings me back to my original question should we still have a commission based payment system for sales people in mortgage?  We need to face facts sales people when paid in a commission/ incentive payment plans quantity becomes the game.  Cause if they don’t make sales they don’t eat.  If sales reps don’t make sales they can’t make the basic living needs.  And this payment plan sets sales reps up to fail.  

If the mortgage industry makes an overall change to provide a base pay to sales professionals the research suggests that the industry will stop feeling like they need more sales people to keep up with quota and people leaving the industry.  It will also promote quality which will lower the industry wide repurchase issues.  Furthermore the research shows that if the industry wide increase in quality starting with giving a base pay to sales reps then sales will increase.  Mostly because, sales reps will have a product that isn’t such a hard sell.  Sales people are the back bone of the mortgage industry but they are paid in a way that statistically sets them up to fail and have constant low morale.  That’s not fair nor is it logical from a business stance. When employees feel stable and empowered they perform miracles. 

This is theoretical though.  But, I welcome people to send messages on twitter and facebook.  Condo Land’s facebook page can be found under the name Condo Land Blog.  Send tweets to @sdgwwgds.  Also leaving comments on this page is helpful too.  Remember sharing is caring and if you found the info in this article informative and helpful.  

​Schrodinger’s Litigation

By: Stephanie Diana Wilson- Gast


A question that comes up to me often regarding structural defects cases is if the HOA has investigated structural defects and they are in the early stages of litigation but they aren’t officially in litigation.  Does this still count as a litigation review required?  

When asked this question it brings to mind the Big Bang Theory episode about Schrodinger’s cat.  https://www.youtube.com/watch?v=pNTMYNj2Ulk big bang theory episode

  This scenario is Schrodinger’s litigation.  Meaning it is both in litigation but yet not.  

For those not familiar with this theory Schrodinger’s Cat is a thought experiment where a scientist in my opinion was committing serious bouts of animal cruelty.  He put a cat in a box with a vial of poison and we don’t know if it opened or not.  So, thus until one investigates the box the cat is both alive and dead. Though the concept and experiment is deplorable to me and if I go further into why it bugs me I will just sound like the anti- Sheldon Cooper. 

Per usual my CYOB please contact your underwriter and real estate professional for case by case comparisons of your condo that you are investing in as each file differs.   

Now that legality is out of the way as a general example this Schrodinger’s Litigation this counts as litigation though the HOA hasn’t officially sued.  And yet it doesn’t still count as litigation.  But, most condo review specialists like myself are not attorneys.  So, it is not our jurisdiction to determine if the project’s litigation is dead or not in this generality.  

However, in this scenario the file has bigger issues that should be dealt with before it ever becomes a condo department issue.  Such as the underwriter will need to verify the structural defects are repaired and thus the property meets collateral requirements.  Fannie Mae and Freddie Mac both deem that litigations where there is an issue of habitability or safety structurally is not acceptable.  But, none the less that’s a question for the underwriter to ask well before it gets to a Condo Review Specialist’s desk.  

However, on the condo side of it there are some details regarding litigation files as a whole that need to be documented.  Such as again if the structural defect has been repaired and the HOA is just trying to get their money back from the developer for the repairs they had to make.  Which is logical cause if there is structural defect even in the common areas that is just more law suits sitting around waiting for a time and place to happen.  No HOA wants that risk.  Also since most of those litigations are monetary in nature FNMA requires proof the insurance is covering the costs of the defense and if the HOA loses, and how much is sought after and that the amount is covered by the insurance policy.   Also the appraisal needs to comment if the litigation will affect the marketability of the project.  

Again reach out to your underwriter or real estate professional as guideline update and change and each case is different from the last one.  And no one wants to be left hanging with a Schrodinger’s Litigation.  Both a do able deal and not do able deal. 


Hopefully this article helped you.  Remember sharing is caring.  Also if you have an idea of a topic on condos you would like to see researched shoot us a tweet at @sdgwwgds or email us. Comments below are also helpful too. 

Resume Fashion Tips

By: Stephanie Diana Wilson- Gast


Normally I stick to Condo specific topics but, recently I have been handed other people’s resumes and asked to take a look and there are a few topics that should be addressed.  Since I work in the Business arena and many of those who read my blog are as well the importance of a resume cannot be understated.  And in the academic arena of business not enough is really ever taught about writing and updating a resume.  So, I have developed some tips on updating your resume.  
Keep up with trends in resumes

Resumes are a lot like fashion things fall in and out of style.  A great example of things falling out of style is the Objective statement.  The muse has written a great article about how it is considered a faux Pas to put an objective statement in a resume. The articel can been seen on  https://www.themuse.com/advice/the-only-time-its-ok-to-use-an-objective-statement-on-your-resume  
However, much like the wearing of white after labor day it has been changed to fit in certain circumstances and changed to fit what is in trend now.  Welcome the new trending concept in resume writing called the Branding Statement.  US News’ Money section has an article on this topic that defines a branding statement as, “Your branding statement should be very brief. It’s not your job title, nor is it a list of your skills. It should provide a description of you, your attributes, the value that you provide to your employer, and things that differentiate you from your competition.”. So summarizing it is a lot like the intro statement on a twitter account.  Short, to the point and says a lot about you.   To Check out more on this topic check out the article noted above at http://money.usnews.com/money/blogs/outside-voices-careers/2013/01/15/resumes-101-swap-a-stale-objective-for-a-fresh-branding-statement.  
Another trend is the concept that a resume should only be one page and others feel that a resume should be as many pages as they can.  Monster.com has a great article on this specific topic and the fact the current trend is 2 pages.  One page a person tends to make the fonts so small to accommodate that no one can read it without a microscope.  But; it all depends on what type of job you are applying to.  I think my little sister who just graduated with her undergrad put it best when she asked similar questions about writing a resume my resume would look totally different from hers because, “That’s right you have a grown up career”.  Applying to jobs in the mortgage industry will look different than small company Office Management jobs.  So research is always in style there.  You can check out more on monster.com on this topic at http://www.monster.com/career-advice/article/how-to-decide-on-resume-length. 
Formatting
Formatting is really important.  We have all heard the studies about the few seconds a resume has to make an impression on an HR rep, Hiring Manager, Manager, or Recruiter but, the info on your resume can be all for nothing if the formatting looks like something whipped up in a high school study hall class on resume basics.  TG’s Adventures In Education has a great example of what I am talking about.  http://www.aie.org/find-a-job/write-your-resume/sample-resumes-and-templates/Resume-Template-High-School-Student-Academic.cfm
Now this doesn’t mean you need to go and do a “Legally Blonde” resume moment by putting your resume on colored paper or in any way drastically dressing it up.  Just go into your Microsoft Word program or if you are like me and love Chromebooks go to the Google Docs program and when creating a new doc select the resume formats that they have standard.  They are professional and add a level of professionalism that the above noted high school example leaves out.  

Also and this is really important to your own sanity save the work you have done as a word doc.  If you have a chromebook do it as both a google doc and a docx format.  However, also make an uneditable PDF version.   The gdoc/ docx, and doc format save helps so you don’t have to start from scratch every time you want to update your resume.  
The reason for an uneditable PDF is often we apply to jobs through craigslist or other sites and it is important to protect the information that you transfer.  An uneditable formatting will make it harder for people to copy or change info on your resume.  We can all never be too careful with our personal info.  
Don’t Show Your Age
One time when I was still new to mortgage I went into an interview and I didn’t think about putting the year I graduated high school and college.  When in the interview the company manager actually told me, “aww you are just a baby”.  Luckily I was raised to be quick witted and replied with, “I may be young but, I am highly educated, experienced, and dedicated”.  That usually shuts things down right away that and when they comment on how young I look patting my hair and saying, “Yeah in my family on my mother’s side we age really well” and saying “I am blessed to look younger than my years and experience prove to be”.  But; this all proves an important point before an interview is lined up thing like that allude to age.  And where age discrimination is illegal who is to say that isn’t happening when someone reviews a resume.  
Another fatal flaw in the age topic is if you put too much experience on your resume or list how many years of experience you have in a summary or branding statement.  Monster has a great article on this topic at http://www.monster.com/career-advice/article/5-things-you-should-never-put-on-your-resume.  
An actual life example is one of my friends gave me her husband’s resume to edit which was a five page resume showing his 30 years in manufacturing.  By cutting down to the most recent experience within the last 10 years it made his resume 2 pages and gave him a digital face lift.  The long and the short of it is most employers don’t want to know what you did at the very start of your career most job fields have changed so drastically that what you did even ten years ago as is asked on most standard applications may be outdated and unhelpful.  So, rule of thumb keep it current and keep it on point.  Sleek and fashionable like a timeless little black dress.  
Social Media

Social media is an important tool in both hunting for jobs and creating a resume.  Many companies and application sites are requiring you to log in and apply with linkedIn so having a LinkedIn account can make or break your job search.  Much like with a resume some things you need to leave on the private setting on facebook and other things you can post on LinkedIn which is more or less facebook for careers for those who don’t know.  
So, putting your twitter handle or your link to facebook should be done with causion.  Much like the reason for uneditable PDF format resumes the internet is a scary place filled with people who want to be you.  So, protecting your ID is vital.  Also we all put things we will joke about with friends and family on facebook that we wouldn’t want to account or comment on with coworkers.  Or at least we wouldn’t want to comment on these posts with co workers for fear of making HR reps twitch with the disturbance in the force.  
This same principle goes for using LinkedIn or Twitter for Business don’t put anything that you wouldn’t converse with coworkers about.  Articles you write or any scholarly publication, artistic publication.  If you can’t talk about it around the water cooler without fearing for your job then don’t even add it to the publications section of LinkedIn (where I will post links to this article in mine [shameless plug done]). 
Have A Portfolio Ready

Now this again is determined based on what type of job you are applying to but; many times an employer wants to see examples of your business writing, or materials you have contributed to help with the furthering of your department.  So, always draw up materials separate on your own time that do not contain proprietary info and keep it as a portfolio.  Also starting a blog on your career field and keeping some of those published articles also can be helpful.  It all depends on the job and company applying to.  And if you put a lot of research into your writing.  If there is no research or teeth to your writing it will be a resume fashion accessory victim as Joan Rivers would have equivocate it.  

References Provided Upon Request… duh?

Seriously don’t put “references provided upon request” at the bottom of your resume.  It kind of makes those reviewing the resume make Homer Simpson like sounds because of course when they ask you will have to provide references.  That’s the whole point in the background check.  Regardless of applying for school or work you need to have people vouch for you.  Putting this quote anywhere on your resume is like a man wearing high heel shoes for fashion reasons.  It was acceptable in the 18th century but; now in the 21st century not so much.  Now it kind of looks like a Napoleon Complex issue.
To Address or Not To Address That Is The Question?

I learned quickly in college putting your address or even just city and state on a resume is a gamble.  Like we mentioned about applying to jobs online putting address info can be risky although most business communications courses still teach you to do it.  Amanda Augustine at the Ladders wrote an awesome article on this topic as well.  You can catch it online at https://www.theladders.com/career-advice/things-you-should-never-put-on-your-resume/.  

I had applied to a job while in my Senior year of college for an Onsite Resident Manager position for a small property management company.  And I made the fools mistake of putting my address on my resume as that was what I was taught in school.  A week later some strange man showed up at my door from the company saying he was doing an impromptu interview at my home because, he wanted to see if I keep my home well and thus would keep the unit they would be providing equally well.  My well kept apartment helped him decide to hire me.  However, I turned him down because that was super creepy and I adopted a dog shortly after.  You can never be too careful.  

To sum up this has been seven tips for writing a resume.  We all need to protect ourselves and our data along with making sure we stand out from the crowd and look professional while doing so.  You have a short amount of time to make that first impression with your resume and those moments can’t be undone.  So, keep your resume current, on point, and fashionable.  
If this article helped you remember sharing is caring.  Also follow me on twitter at @sdgwwgds and subscribe to this blog Condo Land.  

Sharks and Real Estate

By Stephanie Diana Wilson- Gast

 

Personally I have always loved “Shark Week”, on the discovery channel.  They are beautiful and misunderstood creatures.  Being a native Californian and living most of my life in the San Francisco bay area sharks are a relatively common concern.  As a child I loved the Shark exhibit at the Monterey Bay Aquarium and the display of adolescent aged Great White Shark teeth from a shark caught off the coast of Santa Cruz.  Or when they have an exhibit on the Great Whites they used to catch from the wild to study.  There is a great article on this breed of shark on the Monterey Bay Aquarium site at https://www.montereybayaquarium.org/animal-guide/fishes/white-shark.  Oh and the Shark Experience at Vallejo’s 6 flags Marine World https://www.sixflags.com/discoverykingdom/attractions/shark-experience is fun for all ages.  And it is a relativley common sight to see Sharks eating seals in San Francisco, http://abc7news.com/news/cluster-of-20-great-white-sharks-spotted-near-pacifica/1050614/.  We even have Killer Whales that have been recorded attacking and killing great whites in the San Francisco Bay.  https://www.youtube.com/watch?v=a7MCq4gkbm4.  In Southern California locals are used to news and weather reports that include shark warnings.  

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You may be reading about my love of local Sharks (which includes the San Jose Sharks hockey team), and wondering what does any of this have to do with Condos and real Estate?  Well, California is always in a boom for housing and the state is its own Condo Land.  So, is Hawaii which is a popular place to buy condos as well if only for a second home.  

Both Hawaii and California are known for their sharks and shark attacks which does not deter home or Condo sales.  However, with Florida finally starting to come out of the real estate slump it has been in since the 2008 financial crash and the news regarding Florida revolving around the recent gator attack, an enormous gator on a golf course and the recent shooting in Orlando.  (Our Hearts are with those mourning loved ones in Orlando). I have to say honestly it is a common to get an appraisal that has a gator on the patio and a note saying there were no pictures on the patio because of a gator. What we don’t hear about is the fact that Florida is home to the most amount of sharks in the country.  

This includes Bull Sharks which live in fresh and salt water.  http://www.sun-sentinel.com/local/palm-beach/fl-riviera-beach-sailfish-marina-shark-attack-20160413-story.html.  Bull Sharks are known for being extremely violent.

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The National Geographic website posted a map on http://news.nationalgeographic.com/2015/07/shark-attacks-in-the-us/ showing that the most shark attacks happen on the South East Coast and Gulf of Mexico which both waters boarder Florida.  

sharks800

Also currently in the news in Texas off the Gulf Coast they are suffering from a Flesh eating bacteria that is being found in their sea water.  http://www.chron.com/news/houston-texas/article/Report-Another-man-gets-infected-from-8325546.php   And although Shark attacks are not as common in Texas they are home to Great Whites.  I guess everything’s bigger in Texas.  
I could get onto a soap box and note that over fishing and pollution are driving these once thought to be deep sea sharks.  Though I believe there is a way to fix the environment to help these creatures go back to their natural habitats and not be on our beaches so much that America has a rich tradition of Shark Attack movies.  However, that is a conversation for another day.  Today being the first day of Shark week I encourage everyone to learn about these wonderful creatures and respect that when we buy homes on the beach we are paying to look out into their homes.  Respect should be given to these creatures and caution to those who live near them.  

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Delinquency Issues and Condos

wpid-1.-skyscraper.jpg.jpgBy Stephanie Diana Wilson- Gast

When underwriting Condos one of the topics that comes up is delinquency ratios in a project and why does it matter? Well, this is a complex issue within Condo Review and Compliance. First of all we should define what the delinquency issue is. When a person is late on paying their HOA dues for common expenses that the HOA has to pay for this creates a delinquency which the HOA management company or HOA is supposed to track. See what few home buyers know is the fact that HOA’s are able to foreclose, or put a lien on a unit if the HOA dues are not paid. Most laws do not allow for this unless the dues are 90+ days delinquent. Although there is also the concept of a Super Lien but; that is a topic for another time.

FNMA recently changed their guidelines in 2014 to require that a project have no more than 15% of the project can be 60+ days delinquent in common expenses i.e. HOA dues. Previously the rule was for 30+ days delinquent. It seems that this rule was changed because units that are 60+ days delinquent are closer to being in foreclosure. Where 30+ are people who are just late paying. There are a multitude of reasons the dues could be 30+ days delinquent such as the HOA management company has relocated and does not have online payment plans. This sort of scenario would cause a mailing issue to contribute to the delinquency.

This being said another question many ask is why is this just a full review requirement? It is and it isn’t. See if any documentation in the file shows the delinquency ratio it can be an indicator of the financial health of the project which can be interpreted as a collateral issue. Also home buyers would logically not want to invest in a project that has a high potential foreclosure ratio.

There really are not any loop holes to dealing with this issue. Which makes this a good thing for lenders and buyers to watch out for when shopping for a condo project. It is an often over looked issue but, none the less this issue can make or break a deal.

Hopefully this article helped to answer some questions or to spark a conversation with your local real estate professional or underwriter. Again these guidelines are noted on FNMA’s most recent seller guide dated 3/29.16. Always consult your underwriter for any guideline changes. If this was helpful to you remember sharing is caring.