We helped to secure a lot of VA condominium complex approvals in 2009. The VA Regional Home Loan Center-Phoenix is one of the best government agencies with whom I’ve had the pleasure to work. The folks working there are professional and committed. It helps that they know that we do our homework prior to submission for a condominium complex approval.
Sometimes, the system breaks down. My goal today is to explain how better to manage the process, for all parties involved.
The key component to the VA condominium complex approval is the Attorney’s Opinion Letter. Essentially, the VA relies on the expertise of an independent attorney to evaluate the condominium documents and offer an opinion as to whether or not those documents comply with the VA regulations. An attorney opinion letter is NOT a requirement for the submission package but attempting this without one is not recommended. While it adds another layer of cost to the approval process, the result is a greatly reduced examination time at the VA.
The document checklist is available in Chapter 16 of the VA Lender’s Handbook. Specifically, the table of required documents is available on page 16A.03. I suggest that the loan originator AND both real estate agents AND the escrow officer review this table as soon as an agreement of sale is executed. At first glance, the list appears to be ominous (lots of dead trees). Upon more careful scrutiny, it is plain to see that only 5-6 documents are required; the other 20 or so are only required IF AVAILABLE. The VA condominium complex requirements then are almost identical to what would be required for an FHA or conventional loan.
Still, the required documents are the required documents. Failure to provide those documents can result in lengthy delays. The reason is not because of the process, it is because of “trust”. The VA trusts the attorney to properly vet those documents, the attorney trusts the lender to properly organize those documents, and the lender trusts the escrow officer and title officer to properly provide those documents in an expeditious manner.
Simply put, if you show that “you got your s**t together“, the agency assumes you know how to effect a sale with a VA loan guaranty. If they think you don’t, you go to the bottom of the pile. Why then should real estate agents be involved in the process?
Title and escrow personnel rely on RECORDED documents. Sometimes, certain recorded documents refer to other organizational documents, which weren’t recorded. It is when those documents are omitted, that the trust level dissipates and the agency loses faith in the credibility of the proposal. Most of the time, the seller had those organizational documents in the original transaction folder (or her neighbor did) but wasn’t asked for them.
I’m not attempting to assess blame nor responsibility on any one service provider; a successful real estate transaction requires a team effort. Whether the loan transaction is conventional, FHA, or VA, it behooves everyone to review that list quickly, so that mistakes and/or omissions can be corrected.
The VA loves to see a TIMELY package submission with an attorney opinion letter. It is when they see delayed submissions that they lose confidence in the service providers. Agency personnel are people. They are people who can prejudge (fairly or unfairly), just like you or I might. Sister Anastasia was correct when she said “neatness counts“.
Lending guidelines have and will continue to contract. Since the government is playing an elevated role in mortgage lending, it makes sense for all providers, with a vested interest in the transaction, to monitor whether a property is acceptable to the agencies…especially if they’re condos.1 comment