Multi-Family Lending issue due to Zoning

[James Peterson]

I'm under contract for a multi-family house in Columbus Georgia. Its a duplex with a ADU in the backyard
(its zoned SFR-2, up to 4 units are authorized on the lot). My lender essentially stated that they cannot finance this deal because its zoned as a SFH, and if something happens to it, they can only rebuild it as a SFH. Anybody else run into the same issue? I plan on reaching out to a different lender, I'm hoping this issue is primarily lender based and not a concrete "no" across the board.

[Nicole Heasley Beitenman]

Originally posted by @Stephanie P.:

@James Peterson

There really isn't anything a lender can do for this type of property if the zoning is "legal, non-conforming" and you can't produce a 100% rebuild letter.  It's not a matter of whether the lender is willing to take more risk, but whether that loan is marketable on the secondary market and if you don't have the rebuild letter, it will be thrown on the scratch and dent heap of loans, costing the lender thousands (maybe 10's of thousands depending on the loan amount)

 Based on this response, it sounds like you need to find a lender who keeps their loans in-house. Was this duplex built very recently?