Unable to Re-Fi condo due to ongoing litigation with HOA

The lender I’m working with received a Condo Questionnaire stating the HOA is in a current litigation. In order for the Condo Association to be approved with Fannie Mae they needed the lawsuit amount and the condo attorney to verify one of the following:

1.) If Litigation for which the insurance carrier has agreed to provide the defense & the amount is
covered by the HOA’s insurance

2.) The reasonable anticipated or known damages & legal expenses are not expected to exceed 10%
of Project’s funded reserves or

3.) Litigation concerning localized damage to a unit in the project that does not impact the overall
safety, structural soundness, habitability, or functional use of the project.

The attorney couldn’t give information to these questions because:
“there is no way to know whether the Association’s insurance provider will cover a settlement award or damages given the reservation of rights. Because insurance counsel has yet to value this case, I am unable to say whether the known/anticipated damages and legal expenses will exceed 10% of the project’s funded reserves either.”

Because of this, the lender had to suspend my re-fi.

My question is if I wanted to go to another lender to do a Re-Fi, would this always be an issue?

submitted by /u/skamjamz
[link] [comments]

The lender I’m working with received a Condo Questionnaire stating the HOA is in a current litigation. In order for the Condo Association to be approved with Fannie Mae they needed the lawsuit amount and the condo attorney to verify one of the following: 1.) If Litigation for which the insurance carrier has agreed to provide the defense & the amount is covered by the HOA’s insurance 2.) The reasonable anticipated or known damages & legal expenses are not expected to exceed 10% of Project’s funded reserves or 3.) Litigation concerning localized damage to a unit in the project that does not impact the overall safety, structural soundness, habitability, or functional use of the project. The attorney couldn’t give information to these questions because: “there is no way to know whether the Association’s insurance provider will cover a settlement award or damages given the reservation of rights. Because insurance counsel has yet to value this case, I am unable to say whether the known/anticipated damages and legal expenses will exceed 10% of the project’s funded reserves either.” Because of this, the lender had to suspend my re-fi. My question is if I wanted to go to another lender to do a Re-Fi, would this always be an issue? submitted by /u/skamjamz [link] [comments]

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