Q: Our manager recently told the board that there has been a change with “bank requests” and said the board needed to address it. I did not understand what that means or what the changes are. Could you please explain? (A.M., via e-mail)
A: Needless to say, as a result of the tragic condominium building collapse last year, there has been intense recent focus on many issues in the condominium industry, including disclosure. One issue getting a lot of attention is the “Lender Questionnaire,” which is sometimes confused with the “Estoppel Certificate.”
The Estoppel Certificate has historically been used to require the association to certify and prorate assessment obligations at a closing. That law was amended a few years ago to require some additional disclosures in the Estoppel Certificate, such as whether the association has a right of first refusal, whether there are pending rule violations, and what the parking arrangements are. The law requires an association to complete and return Estoppel Certificate requests within a certain timeframe.
The Lender Questionnaire is a different document. When a potential purchaser wants to borrow money (“take out a mortgage”) to buy a condominium unit, the bank which lends the money often “sells the loan” on the “secondary mortgage market.” The “secondary mortgage market” has several entities that buy mortgages, the largest being the Federal National Mortgage Association (“Fannie Mae”).
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