RTTNews - Fannie Mae Tightens Lending Criteria For Condo Purchases

RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises ....

Posted using ShareThis

Anyone interested in purchasing a condo, or sellers looking to sell a condo, need to check out the changes announced Wednesday by Fannie Mae. This could potentially effect sellers ability to sell & buyers ability to buy. Some highlights include:

1. Raising the minimum owner occupied rate to 70% from 51%. If there are alot of rentals in the condo development or foreclosures being held by lenders Fannie Mae is not interested in these loans unless they conform to the higher owner occupied rate. The thought is that higher owner occupancy rates make for more stable loans and lower default rates.

2. Looking at how many condo association members are behind on their condo dues. Looking for the health of the associaiton.

3. Large percentages of total ownership held by 1 owner. Looking for monopolies of ownership held by a developer, investor etc. If any 1 owner holds greater than 10% of the total ownership Fannie Mae is restricting loans.

Fannie Mae & Freddie Mac set minimum requirements for the loans they're willing to hold. Other lenders which package loans for them to purchase will then have to make sure their loan offerings conform to allow for the potential sale to Fannie & Freddie.

How this effects you

A seller may have a limited pool of potential buyers if their condo association does not conform to the new higher standards. Condo boards will have to pay close attention to these guidelines if they have an association interest in maintaining market values for the members.

Buyers might be blocked from certain developments, especially properties that are in foreclosure or short sale because of the conforming regulations can't be met, therefore missing out on some great values. Buyers may not even find out that they shouldn't be looking at certain properties because the suitability/health of the condo development isn't known till the offer process has started.

It'll be an interesting several months to see how this works it's way through the marketplace.


Popular Posts