Asked and AnsweredI am buying an apartment in a small co-op that is self managed. How does the bank obtain the required “co-op questionnaire” in order to complete its underwriting?
Depending upon how small the co-op or condo actually is, the bigger question is whether financing will be available. Since small buildings usually do not have audited financial statements, traditional institutional lending may be difficult to obtain because Fannie and Freddie requirements can't be satisfied. It is essential for a buyer to locate a bank that will lend in a small co-op or condo before the contract is signed and not after. The contract should include mortgage and funding contingencies, in case the bank who showed interest in making the loan changes its mind prior to closing (it can happen). Make sure that the co-op or condo’s tax returns will be available for submission to the bank if audited financials are not prepared.
When a building is self-managed, either the President or Treasurer will be the “go to” person for purposes of completing the bank’s questionnaire. Those residents should be on board about cooperating when due diligence is performed at the beginning of the transaction.
For more, see "When Bigger Isn’t Better: Purchasing in A Small Co-op or Condo".