MISSION IMPOSSIBLE LOANS – EPISODE 10
The Condo in San Francisco, the Family in Nepal, and the Loan That Almost Didn’t Happen
Most people think getting financing should be easy when:
- You have excellent credit
- You own a condominium free and clear
- You have rental income
- You have significant equity
In theory, they’re right.
In reality, lenders don’t finance theories.
They finance risk.
And Josephine’s file had plenty of perceived risk.
Ironically, our story began more than ten years earlier.
Back then, Josephine wanted to purchase a condominium in San Francisco’s South of Market neighborhood. The building had experienced construction defect concerns, and financing options were limited.
She was worried that waiting for financing approval might cause the seller to reject her offer.
Fortunately, her parents stepped in and purchased the property with cash, allowing her to close escrow immediately.
Problem solved.
Or so everyone thought.
Fast forward a decade.
Josephine was now married with two children and living halfway around the world in Nepal, near the foothills of Mt. Everest.
She reached out because she wanted a line of credit against her San Francisco condominium to invest in a business opportunity.
At first glance, the request seemed straightforward.
She had excellent credit.
The condominium was no longer involved in litigation.
There was substantial equity.
What could possibly go wrong?
As it turned out…
Almost everything.
Curve Ball #1: The Condo Was Now a Rental
Josephine no longer lived in the property.
It had become an investment property occupied by tenants.
Many home equity lenders prefer owner-occupied properties and become significantly more restrictive when a condominium becomes a rental.
Fortunately, as a mortgage broker, I have access to lending options beyond what most banks can offer.
We moved on to the next challenge.
Curve Ball #2: The Borrower Lived in Nepal
This was where the file became truly unusual.
Josephine wasn’t temporarily overseas.
She lived there full-time.
Most U.S. lenders become uncomfortable when borrowers permanently reside outside the country.
From a lender’s perspective, legal enforcement becomes more complicated if problems ever arise.
Fortunately, Josephine had maintained strong ties to the United States.
Her parents still lived on the East Coast, and much of her official correspondence continued to be delivered to their address.
That helped.
But it didn’t solve the next issue.
Curve Ball #3: No Employment Income
Years earlier, Josephine had worked in the technology sector.
Today, she was a full-time mother raising her family.
Her husband was a foreign national.
Neither of them had U.S. employment income.
Traditional underwriting was essentially off the table.
Most conventional lenders want to see predictable income streams.
W-2 wages.
Salary.
Business income.
Tax returns.
Josephine had none of those.
What she did have was a performing rental property.
That opened the door to one of the most powerful financing tools available to investors today:
The DSCR Solution
A Debt Service Coverage Ratio (DSCR) loan evaluates the property’s income rather than the borrower’s personal income.
Instead of asking:
“How much does Josephine earn?”
The lender asks:
“Does the property’s rent adequately cover the proposed loan payment, taxes, insurance, and HOA dues?”
This became the path forward.
The condominium itself would qualify for the financing.
Or so we thought.
Curve Ball #4: The Insurance Had Lapsed
Because the condominium had been owned free and clear for years, Josephine had allowed the property insurance policy to expire.
No loan.
No lender.
No one requiring coverage.
Unfortunately, lenders don’t share that perspective.
Every lender requires adequate insurance before funding.
In today’s California insurance market, obtaining replacement coverage can be easier said than done.
Thankfully, my insurance contacts were able to secure a new policy before the transaction unraveled.
Another obstacle cleared.
Then came the next surprise.
Curve Ball #5: The Parking Space Problem
The tenant’s lease included a parking space.
That sounds like a positive feature.
And for the tenant, it certainly was.
For the lender, however, it created a calculation issue.
DSCR lenders often separate parking income from residential rental income.
The parking allocation could not be fully counted toward qualifying rent.
That reduction lowered the property’s effective qualifying income and reduced the maximum loan amount available.
Yet another hurdle.
Curve Ball #6: Signing Loan Documents From Nepal
Closing a loan while living overseas introduces challenges most borrowers never think about.
Josephine could not simply stop by a local title company.
She needed an appointment at the U.S. Embassy in Nepal to complete notarization procedures acceptable to both the lender and title company.
Scheduling, coordination, international document timing, and lender requirements all added weeks to the process.
What seemed simple became anything but simple.
The Final Surprise
After six weeks of problem-solving, structuring, underwriting, insurance coordination, embassy scheduling, and lender negotiations, we finally closed.
But the biggest surprise wasn’t the loan.
It was the property value.
Like many San Francisco condominium owners, Josephine assumed her unit had appreciated significantly over the prior decade.
Instead, she learned that post-COVID market conditions had dramatically changed the landscape.
Rather than increasing by the 15% she expected, the condominium’s value had actually declined approximately 3% over the same period.
That unexpected valuation became one final reminder that real estate markets do not always move in straight lines.
The Lesson
Josephine’s story highlights something many borrowers discover too late:
A strong credit score alone doesn’t guarantee financing.
Lenders evaluate the entire picture:
- Occupancy status
- Property type
- Income structure
- Insurance coverage
- Geographic location
- Documentation requirements
- Property cash flow
- International residency
Fortunately, difficult files often have solutions when you know where to look.
Sometimes the answer isn’t conventional financing.
Sometimes it’s a DSCR loan.
And sometimes the real challenge isn’t qualifying for the loan.
It’s navigating all the twists and turns that appear along the way.
That’s why this transaction became another chapter in my Mission Impossible Loan series.
Because what appeared simple at first glance turned out to be anything but.
Why this matters to you?
Every borrower is unique. Every property has a story.
If you’re navigating a real estate challenge — big or small — I’m here to help you find the smartest path forward.
🔎 BROKER’S EDGE – Smarter Real Estate Lending
🤝 Looking out for your Best Interest, and Helping Homeowners, Investors & Small Business Owners since 1990
📞 Steven Hook | Residential & Commercial Mortgage Broker
📱 415-260-9376 | 📠 415-449-3428
🎓 MBA | CMPS | CMA
👉 Schedule a Call
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🌐 shook@Uamco.com or smhloans007@gmail.com
