Rexera is named the Best AI-Powered Platform of 2024 by Inman

Request Demo

The Pitfalls of Manual Condo Reviews: A Comprehensive Analysis

Condo Review, Lenders,
Published: Feb 29, 2024
  by Editorial team
blog

Condo reviews are no walk in the park. Ensuring regulatory compliance and making sound lending decisions require extensive and careful analysis.

That analysis, however, involves figuring out legal and financial information, like the HOA’s health, and dealing with insurance and liability matters. The point is manual checks take time and often need double-checking. 

So how can lenders make confident and reliable decisions and not invest a disproportionately long time in each and every condo review? 

One way is to become the unrivaled experts in manual condo reviews. But for those who don’t have the time or patience to do so, you can refer to this article as your guide to avoiding the pitfalls of manual condo reviews. 

Let’s begin. 

Condo Reviews and the Fannie Mae and Freddie Mac Requirements

annexation in real estate Greek architectural building

Condo reviews are closely related to Fannie Mae and Freddie Mac through their condominium project approval guidelines. Both Fannie Mae and Freddie Mac have specific requirements that condominium projects must meet to be eligible for financing through their programs. 

These guidelines are crucial when doing condo reviews because they set the eligibility criteria (legal, operational, and financial) for condominium projects to qualify for financing. And since lenders rely on the approval of these two institutions to guarantee their investment is protected in case of default, following their guidelines makes all the sense. 

Here are a few of the eligibility criteria. 

Fannie Mae Criteria for Condo Reviews

When evaluating condominium projects, Fannie Mae considers a range of criteria including but not limited to:

  1. Financial Viability
  2. Residential Nature of the Project
  3. Ownership Structure
  4. Project Budgets, Financial Statements, and Reserve Studies
  5. Project Construction Plans
  6. Completion Reports
  7. Project Marketing Plans
  8. Environmental Hazard Reports
  9. Appraisal Reports
  10. Evidence of Insurance Policies and Related Documentation
  11. Condominium Project Questionnaires
  12. Legal and Recorded Documents

Freddie Mac Criteria for Condo Reviews

Freddie Mac’s criteria for evaluating condominium projects include considerations such as:

  1. Determining Project Eligibility Requirements
  2. Exempt From Review or Project Certified Status
  3. Streamlined Reviews for Established Projects
  4. Established Condominium Project Reviews
  5. New Condominium Project Reviews
  6. Reciprocal Project Review
  7. Documentation Retention
  8. Condominium Project Questionnaire
  9. Project Types and Identification Criteria
  10. Project Documentation Requirements

It’s important to note that the condo review requirements from both Fannie and Freddie change often. Lenders who process these documents need to make sure they coordinate their work with the latest versions of the guidelines. 

The Manual Condo Review Process

brownstones with foliage colorful houses real estate branding and rebranding

The manual condo review process requires a comprehensive understanding of various areas, including real estate laws and financial analysis, to effectively assess the eligibility of condominium projects for financing. 

Along with that, it’s important to organize the work in straightforward, easy-to-follow steps. 

The Intensive Data Collection Phase

The first step in a manual condo review is the collection of necessary project documents. These may include the project’s declaration, bylaws, budget, insurance policies, and other relevant records. This phase can be time-consuming and labor-intensive, particularly for larger projects with extensive documentation.

The Rigorous Data Analysis Phase

After acquiring all the necessary documents, the next step is a rigorous analysis of the data. This involves scrutinizing the project’s financial statements, evaluating the adequacy of its insurance coverage, assessing the condition of the property, and reviewing the project’s legal standing. This phase demands a high level of expertise and can be prone to errors if not executed meticulously.

While requiring specific expertise and considerable time, the evaluation of the legal, financial, and operational aspects of condominium projects helps lenders make well-informed financing decisions.

The Pitfalls of Manual Condo Reviews

beige facade building with baby blue window trims and balconies with plants-types of liens article

Conducting manual condo reviews, like any other manual work, comes with issues. For the condo reviews, shortcomings in the data gathering and evaluation process could wreck decision-making.

Let’s look at a few potential pitfalls of the manual condo review process.

The “Spaghetti Infrastructure” Dilemma

One of the significant challenges in manual condo reviews is the lack of a centralized database or platform for data storage and management. This can lead to a “spaghetti infrastructure” scenario, where data is scattered across various channels, making it difficult to track and analyze.

Picture a labyrinth of documents, financial statements, and legal records dispersed across various platforms. This fragmented scenario not only hampers productivity but also poses a genuine risk of critical information slipping through the cracks. 

This “bawl of spaghetti” urgently calls for a cohesive and consolidated data management solution. 

The “Single-User Dependency” Issue

Manual condo reviews often rely heavily on a single expert or a small team. This dependence on a select few can pose risks, particularly if the key personnel leave the organization or are unavailable during crucial periods.

Similar to walking a tightrope without a safety net, depending solely on a limited number of individuals puts lenders in a dicey position. 

The “single-user dependency” issue highlights the importance of a more resilient and collaborative approach that accounts for the continuity and reliability of the condo review process.

The Hidden Costs

While manual condo reviews may appear cost-effective initially, they often have hidden costs. These may stem from inconsistencies in the process, errors leading to rework, and extensive time and resources required to conduct the reviews.

These hidden costs pose the question of whether manual reviews are the better choice when lenders are looking to optimize productivity.  

Operational Inefficiency

Manual processes inherently lack efficiency, especially when compared to automated solutions. Time-consuming, labor-intensive, and prone to human errors, these manual operational issues can delay the review process and reduce its overall effectiveness.

Manual condo reviews might not be the most effective way to go about hitting KPIs when it comes to the number of evaluated investment opportunities. 

Difficulty in Scaling

Manual condo reviews do not scale well. As the volume of data increases with the growth of the business, manual processes become increasingly cumbersome. The inability to scale effectively can limit the organization’s growth and responsiveness to market changes.

Struggling to scale because of the excessive work your organization puts into manual condo reviews might be a sign that it’s time to look into more effective streamlining options. 

Inadequate Documentation

Manual condo reviews often suffer from inadequate or inconsistent documentation. Tracking and requesting all necessary documentation when the real estate industry lacks centralized databases is no easy task. 

Finding and verifying data turns the manual review process into an even more cumbersome task. 

When it’s hard to validate information, the eligibility of a condo project is also at risk. 

How to Review Condo Project Documents Effectively

condo buildings dark blue and orange, terraces, condo vs hoa fees

Given the pitfalls associated with manual condo reviews, it’s crucial to adopt strategies that enhance its effectiveness.

Adopting a Structured Approach

Having a structured approach to condo reviews can significantly improve the process. This involves defining clear procedures for data collection and analysis, establishing guidelines for document review, and setting standards for data reporting.

Ensuring Adequate Training

Proper training is essential for conducting effective condo reviews. This involves not only training on the technical aspects of the review process but also on the legal and financial aspects of condominium projects.

Fostering Collaboration

Condo reviews should not be an isolated process. Instead, they should involve collaboration between various stakeholders, including the review team, property managers, legal advisors, financial analysts, and other relevant parties.

Leveraging Technology

Technology can play a crucial role in enhancing the accuracy of condo reviews. Tech tools help automate various aspects of the review process, reducing the reliance on manual work and minimizing the risk of errors.

Is There a More Effective Way? How Technology Can Help You Streamline Condo Reviews 

incorrect property records

The short answer is “Yes, there is.” If your goal is to optimize and error-proof your condo review projects, then you should look into tech-enabled solutions. 

Technology can revolutionize the review process. And that’s a fact. By enhancing thoroughness, accuracy, and collaboration, technology delivers statistically more productive processes.

Rexera, for example, has built a comprehensive platform that offers a range of solutions to simplify the condo review process. Consolidating AI technology and a team of real estate professionals help us optimize the review process and offer faster turnaround times and more reliable solutions. 

Here’s how the process works. 

  1. Your manual efforts and errors are reduced. A combination of automation tools and real estate professionals’ input helps us gather and organize a comprehensive database of condo documentation
  2. You don’t have to sift through hundreds of pages of documents to make accurate assessments. AND you don’t need to deal with scanned PDF documents. Our platform’s capabilities help us create extensive reports where we analyze all condo documents, provide summaries, and highlight potential eligibility issues. 
  3. You have full control. Our customer service team has the quickest response time so that your deadlines are prioritized and you get updates at every stage of the condo review process
  4. Your condo review workflows are standardized. Rexera’s AI algorithms, supported by real estate professionals, create standardized and consistent workflows and summaries of approval/denial. We ensure that you receive clear and uniform information to help you expedite the decision-making process.
  5. Your condo reviews are always on time. With the combination of automated workflows and real estate experts’ input, we’re able to reduce the clear-to-close timeline by 40%. 

Conclusion

orange and black building purtruding balconies- types of liens

The future of a condo project significantly hinges on the outcome of condo reviews, as these evaluations determine the project’s eligibility for financing and affect its appeal to both buyers and investors. Successful reviews can lead to increased marketability, higher investor confidence, and better financing options.

But if you’ve been tasked with reviewing condo projects, you have no doubt experienced some of the manual process downsides. Taking considerable time, prone to mistakes, lacking essential documentation, and being hard to organize, these reviews are not an easy undertaking. 

To adapt to the challenges of manual reviews, lenders have to employ a structured, collaborative approach and ensure adequate training. These are resources that require considerable investment. 

Or take advantage of tech-driven solutions. Tools that make things faster and more accurate while reducing errors. 

If option two sounds like something you would look into, we can help. Here you can find more about Rexera’s condo project review. 

In the meantime, stay tuned to everything condo reviews, HOA management, and HOA document acquisition by signing up for our blog. 

tw fb link tg whatsappp

Rexera in the News

n1 n1 n1 n1 n1 n1 n1 n1 n1 n1
Proud members of
p1 p1 p1 p1 p1 p1 p1 p1 p1
What our clients say about us?
rev1
Katie Zorn, Ambassador, Hankin & Pack
linked website
I couldn't do my job without you
You all rock! Seriously. I do see all the hard work you guys do. This job isn't easy. I couldn't do my job without you guys so I mean it when I say YOU ROCK!
Katie Zorn, Ambassador, Hankin & Pack
rev1
Lori, Escrow Support Supervisor
A huge win for us
"Your team discovered the lien and let us know so we were able to get the payoff statement. We were also able to revisit the research and find the recorded lien.

This is a huge win for us – so THANK YOU for all you do!"
Lori, Escrow Support Supervisor
rev1
Brooke Eshelman, VP of Operations, Proliant Settlement Systems
linked website
Flawless communication and the best customer service
“The communication with Rexera stood out. You’re constantly updated on the status of your order, and if there’s a problem, you’re alerted immediately. Rexera always finds a solution and constantly follows up. I just believe the customer service that Rexera provides is at the next level."
Brooke Eshelman, VP of Operations, Proliant Settlement Systems
rev1
Brad Honn, Senior Director of Escrow and Title Operations, Homeward
linked website
Worry-free closings
“As we all know, HOA issues can really blow up and cause a lot of problems for closing. So it helps us all sleep better knowing that there is not going to be a problem, or anything we forgot on the order, or an update that we forgot to complete before closing the transaction. Because we have a great partner Rexera, making sure that those things don’t happen to us.”
Brad Honn, Senior Director of Escrow and Title Operations, Homeward
rev1
Kacie McAteer, Vice President, Ideal Title Agency
linked website
They always go the extra mile
"Rexera is simply above the rest when it comes to our HOA needs. Their portal is perfect, their communication is constant, and they always go the extra mile in order to meet our deadlines and impress our customers. I would highly recommend them to everyone in the title insurance industry. Thank you Rexera for all that you do!"
Kacie McAteer, Vice President, Ideal Title Agency
rev1
Diana Casella, Ideal Title
website
A vendor that cares
"We’ve only been working with you all for a little while, but so far my team is singing nothing but praise and relief at finally having a Vendor that cares about these files as much as we do. "
Diana Casella, Ideal Title
rev1
Michelle Rose, Partner, Closing Day Settlements
linked website
Number #1 for efficiency
"I highly Recommend Marina Hubenova and sending all orders to Rexera. I love sending all my orders through their client portal or in Qualia. They are number #1 with efficiency and detailed reports. I never think twice on placing my orders with them. "
Michelle Rose, Partner, Closing Day Settlements
rev1
Shawna Hernandez, Chief Operating Officer, Endpoint
linked website
A partner for innovation
"We are constantly tweaking and refining our processes, so we needed a reliable partner that would go along this journey with us. And Rexera (formerly InspectHOA) is exactly that."
Shawna Hernandez, Chief Operating Officer, Endpoint
rev1
Cristina Sadler, Escrow Officer, TransCounty
linked website
A way to take back control
“I was worried the job wouldn’t get done, but it always gets done! It’s worth it; it’s beyond worth it!"
Cristina Sadler, Escrow Officer, TransCounty
rev1
Scott Young, EasyKnock
linked website
A solution to a historical problem
"Rexera has been an instrumental partner in mitigating risk and creating efficiencies in our acquisition process. They are the solution to a historical problem that title companies and other vendors face in every transaction."
Scott Young, EasyKnock
rev1
Melissa Daniels, CEO, Emerald National Title
linked website
Going above and beyond
“Why does a closing have to feel like a transaction? At Emerald National Title, our vision is to create a customized experience with a dedicated closing officer. So when a closing goes sideways, and you have a partner like Rexera that sends someone to the HOA office in person to help resolve the issue, that is a partner that understands that buying a home is personal, not a transaction. That is an example of Rexera going above and beyond that directly supports the vision for my business.”
Melissa Daniels, CEO, Emerald National Title
You will hear from us soon








    You will hear from us soon