Lender shuold have asked HOA for all documentation around day three. HOA's in most states have a fee - anywhere from $300 to $1000 just to provide the budget, bylaws, condo cert, if there are pending lawsuits... A pending lawsuit would weigh heavy on all the residents. In Calfornia two law firms went to every HOA and management company that was nearing the nine year old mark to sue the builder or city planning or deep pockets to show construction defects or planning oversight. These law firms assured the HOA's they would all reap in piles of cash to make improvements. BUt cough COUGh the law firms did get big settlements tying up owners from being able to get government or conventional loans during the four year legal process. The majority of the money goes to the law firm for fees and incedentals. This devalues the complex, as the sellers during the time period had to discount prices and either take all cash offers or hard money loans. A pending lawsuit even for the common areas can suck all the reserve money out of the HOA and raise the monthly fees for all. Give me the legal name of the complex and I can lookup and tell you why they are asking this. The age of the complex has nothing to do with the request. Perhaps they have low insurance coverage with very high deductable and no reserves? Lots of trip and fall claims? Girl from chandelier fell and broke leg claim (this is true story in a common area) Unpaid pending claims?  Lender was remiss in not doing this upfront. Ask for copy of appraisal and see if appraiser made some notes about the complex. Get a copy of the Master insurance policy and review- is coverage enough to replace what is there and rebuild? 

Yes as far as wanting the insurance information Paul S. Henderson, REALTOR®, CRS and I assume they usually ask the insurance company about the commons area BUT they don't normally tell us what questions they will be asking the insurance company. I assume this is a standard question for them.

That is common here but it is usually done earlier in the process. The age of the complex has nothing to do with it, though. I know of one complex where the flood insurance on the garages (common areas) was canceled by the Board and wonder how that will affect units that are for sale. 

It is commonly asked for but depends on the characteristics of the loan. When it is asked for this late in the game, it is often because the property was submitted as an SFR instead of a PUD and the underwriter wasn't made aware of the HOA until the appraisal was received. 

Yes, we provide HOA docs and disclosures asap.

Ex. of possible issue: the HOA has an active lawsuit, therefore it is almost impossible to get a loan with less than 40% down. 

the condo management company would handle all of that for us..... 

Yes, the HOA's financials do come into question by the lender. Some Associations are a financial or legal mess!

Banks are interesting with HOAs.  Hopefully they're more responsive than the one I'm dealing with now.

Here in AZ the title company is the one to ask for and get all the HOA documentions, HOA stuff, CC&R's etc.  I have not seen a lender asking for insurance policy info on common areas/claims in 34 years.  Perhaps this the start of another trend?

Absolutely! We just had a lender request that very information on an office condo building.

Lenders want to know that a complex has proper and adequate insurance. I am not knowledgeable about the normalcy of requesting information about past claims. Is the lender looking for a reason to deny the buyer's loan or simply doing their normal due diligence?

Yes, but, this is routinely done very early in the process. I'm surprised they waited until the week prior to Closing to do this!

Lenders/underwriters can inquire with some requests that seem "odd" or "strange" to us.  Stuff happens.  

 Probably due to all those lawsuits in California. Lenders are getting gun shy on HOAs across the west now knowing many Californians are moving to other states such as Oregon and Washington and bringing their litigious mind set with them.

This is an underwriter earning their pay...

Wow, that's a tough nut to chew Paul. No, this question has not risen to the top YET!

Not this close to closing. What are they looking for, something they want to see or something real? Contact a democratic member of Congress! 

I've gotten requests for a master insurance policy (but usually long before closing), but not for insurance claims.

Thanks for sharing this experience.

I hope you have a back-up lender. The primary lender is acting like they don't want this one on their books

Gosh... are they wanting a full 40-year history or just current info and pending claims (if any)?

Often, but certainly not just a week before closing.

Insurance companies are in the business of collecting premiums, and doing what it takes to not pay out, I would expect that they would be doing their research and calculating their risk.

yes. painful.

Paul,

I hope all goes well for you.  You have some good answers. A

All of that is typically dealt with upfront with the underwriting team. 

I'm surprised this request is coming so late in the process. Lenders here usually request this information early on in the process and want to know all sorts of things about the HOA. If there is litigation in place it's tough to get a loan.

Asking for HOA insurance is standard practice on every file. What is not, is asking for it so late in the process. This should have been done after the title and appraisal are finished, and it should have been listed on the initial conditions. Your lender or processor should have known about that.

Also, as a Realtor, you won’t normally be involved with this, unless there was an issue. Just have the bank or the processor call the association to get the name of their master insurance company, then fax the request and you will get it this afternoon (if you are lucky)

I believe the closing attorney collects this infomation.

We always havea date in our contracts for all HOA docs. and make it almost same date as title.

Request for such disclosures by the lender should have been made much earlier on.. of course I do not know how long from contract to settlement. Perhaps they are only asking for any current claims that have not been resolved? Paul S. Henderson, REALTOR®, CRS I would probably put the loan officer on notice about such late info requests harming the likelyhood of good business