I am currently under escrow to buy a condo where everything has gone smoothly up to this point. After reviewing the HOA docs, my lender has notified me that the HOA’s master insurance policy only covers 75% replacement cost for the building, while they require 100% replacement cost under Fannie Mae guidelines. I am now worried that I won’t be able to get the loan and close.
My lender has already called the HOA to ask if they will increase their policy, but they have declined. I am planning on calling them once more to try and convince them that increasing the policy will increase their property values since they would be able to sell to a larger pool of people, as well as make refinancing easier.
Is there anything else I could do here? Is it possible to take out a personal insurance policy that will cover this gap? Can I offer to personally pay for the increased premiums? Are there other lenders out there who don’t follow the guidelines and would accept their current insurance policy?