Projects with any sort of re-sale restrictions present a severely negative impact on the marketability of the unit in the event borrower defaults and this becomes an REO. It is important to identify what the restrictions are in order to determine project warrantability and eligibility:
- If the only restriction is “Right of First Refusal”, this is okay, and the project can still be eligible as Warrantable.
- For projects with age restrictions, such as 55-and-older communities, we will allow financing to these projects if:
- Borrower meets the age requirements, and;
- The project must not have any rehabilitation, medical treatment, or elder-care facilities (for example, nursing homes).
- The project will only be considered eligible as a non-Warrantable. If both the above conditions are not met, the loan will be ineligible under all loan programs.
- For projects with income restrictions, such as low-to-moderate income (LMI), we will allow financing to these projects if:
- the subject unit is NOT one of the LMI or income-restricted units.
- The project will only be considered eligible as a non-Warrantable. If the above condition is not met, the loan will be ineligible under all loan programs.
For all other re-sale or owner-related restrictions not identified above, the loan will be deemed ineligible under all loan programs.