{"id":533,"date":"2020-03-13T00:53:30","date_gmt":"2020-03-13T00:53:30","guid":{"rendered":"http:\/\/www.eastbaysmortgagebroker.dreamhosters.com\/?p=533"},"modified":"2020-10-07T21:51:14","modified_gmt":"2020-10-07T21:51:14","slug":"minimum-property-standards","status":"publish","type":"post","link":"https:\/\/www.eastbaysmortgagebroker.com\/minimum-property-standards\/","title":{"rendered":"Minimum Property Standards For Fannie Mae &#038; Freddie Mac Loans"},"content":{"rendered":"<p>We often get questions about just how beat up is <em>too beat up<\/em> to get a normal Fannie Mae \/ Freddie type loan on a property, and thus avoid hard money. The general rule of thumb is that the property must be a complete and functional house and absent any flagrant health or safety issues.<\/p>\n<p>Often the ones that are the best value for the price are \u201cgrandma\/grandpa houses.\u201d<\/p>\n<h2>These properties are often characterized by one or more of the following:<\/h2>\n<ul>\n<li>One spouse has passed away; the surviving spouse has neglected to maintain the property.<\/li>\n<li>The house is complete and functional &#8211; grandma has been living there, after all &#8211; but is in a condition best described as \u201cgross.\u201d The oven hasn\u2019t been cleaned in years, but it still works. The walls are yellow with cigarette smoke, but they\u2019re structurally sound. The refrigerator is from the 1970s, very loud, and presumably very energy inefficient. And so on.<\/li>\n<li>Often times the surviving grandparent, and\/or their kids, grandkids, or other heirs, are either unwilling or unable to invest the capital to make the property \u201cturnkey.\u201d Investors often correctly see this as a great value-add opportunity.<\/li>\n<li>Unpermitted work. Specifically in the SF East Bay area, it\u2019s often the case that permits are not needed for improvements that were historically done to the property. In such cases, if the work was done reasonably well, the appraiser will comment that the work \u201cappears to have been done in a workmanlike manner\u201d and it\u2019s simply a non-issue. Note that this is regional: things that may be flagged as issues in Los Angeles will be perfectly acceptable in Oakland or Vallejo. This is not \u201cofficial\u201d but is what we see on the ground.<\/li>\n<\/ul>\n<h2>Note a few things:<\/h2>\n<ul>\n<li>Generally, purely cosmetic issues will not interfere with your ability to finance a property using Agency financing.<\/li>\n<li>Sometimes when a home isn\u2019t quite up to par, it can make sense to implement temporary fixes for minor issues.. For example: if the home lacks an oven, it\u2019s more cost effective to buy one off of craigslist and install it at the property than it would be to take out a hard money loan at 13% interest rate and 3 discount points.<\/li>\n<li>For bank-owned properties, the bank will generally not give a buyer permission to make any changes or improvements to the property prior to the close of escrow.<\/li>\n<\/ul>\n<p>The ultimate price of a definitive answer is going into escrow on the property and ordering an appraisal. In such cases, it\u2019s best to have all contingencies in place. If you have any questions about <a href=\"https:\/\/www.eastbaysmortgagebroker.com\/\">obtaining a mortgage in California<\/a>, or a scenario that you\u2019d like to go over, please call Chris Mason at (415) 846-9211 or schedule a free 30 minute consultation using our <a href=\"\/contact\">online form<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The general rule of thumb is that properties must be complete, functional, and absent any flagrant health or safety issues. Read this post to learn more.<\/p>\n","protected":false},"author":2,"featured_media":667,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[9],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Minimum Property Standards For Fannie Mae &amp; Freddie Mac Loans<\/title>\n<meta name=\"description\" content=\"The general rule of thumb is that properties must be complete, functional, and absent any flagrant health or safety issues. 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