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Wednesday, January 19, 2011

Stricter Lending Guidelines for Condos or Help I'm stuck in a Condo

As the government becomes more involved with the housing industry, now HOA have be FHA, Fannie Mae, or Freddie Mac.  If your HOA is not approved then it will be hard to obtain a loan from these agencies.  Now, these make up 30% to 50% of the origination lending.
The National Association of Realtors estimates that 23,000 condominium projects nationwide are on the verge of losing their F.H.A. approval by spring. Some 2,200 buildings with older approvals lost their status in December. Last month, though, the F.H.A. granted extensions.
Lists of approved buildings are available online at Fannie Mae and the F.H.A.Fannie Mae’s guidelines typically preclude it from buying a new-purchase condo loan from a lender if more than 15 percent of the owners in the condo development are 30 days or more late on monthly maintenance fees. (The provision doesn’t apply to an owner seeking to refinance a Fannie Mae loan.)
Other hurdles: Condo associations are required to set aside 10 percent of their budgets for maintenance and “reserves”; and new developments are ineligible for Fannie-backed financing unless 70 percent of their units have sold or are under contract (the threshold used to be 51 percent). Freddie Mac adopted similar guidelines last year.
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