Some loan officers I know have given us the heads up that effective June 1 there are many changes coming in mortgages and needed down payments via Fannie Mae New National Down Payment and Loan Policy Guidelines. The new guidelines as I understand it are meant to supersede earlier guidelines written in December 2007 that were not working out. As a whole, real estate prices are declining, and buyers were unable and unwilling to put up more money to purchase homes in this current market. The new changes are meant to get things moving. What is not mentioned in the proposed changes...are the changes that will apply to condos. I would love to hear input from other loan officers and mortgage folks about how this will apply to condo units and their financing as it relates to these changes. There are several areas I would like to hear about:
- Loan limits
- The amount of down payment that will be needed to purchase.
- The rates that will be charge for condos.
- The availability of condo conversion units financing.
- Condo unit financing / complex vacancy rates / percentage of rented units.
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I GOT SOME OF IT LAST WEEK. I've been checking with lenders in my area because I've got some significant traffic from first time home buyers. We have a few new condo projects that are not approved for VA/FHA loans and conventional is the only thing left.
1. Fannie Mae guidelines will require that at least 51% of the units are owner-occupied and not rented out. This hasn't changed but the condo assns are under scrutiny to verify owner occupancy. Boards will have to design stricter records re rentals.
2. Borrowers may not obtain FNMA financing of more than 15% of the units are late with their association fees.
I suspect that condos appreciation will slow if unit owners can't sell.
It seems that condos are always the ones to become popular at the end of a market upswing and always the hardest hit when the market swings the other way....
Jim...
Thanks for the heads-up. This is something that I was not aware of.
Lenn Harley, Homefinders.com, MD & VA Real Estate Thanks for the info Lenn. I have also heard that a percentage in new condo construction must be sold before financing is available. I know several agents sitting new condo developments that will lose the ability to obtain financing on the first of June. I had also heard that condo conversions are not included. I need to hear from some lenders.
Charles McDonald / Your Trusted Agent for Charlottesville Real Estate (RE/MAX Assured Properties) Before the real estate correction occured, they always referred to it as a condo bubble. The experts inferred the correction it would not spill over into single family homes. Condos sort of over did it.
Richard Weisser, Associate Broker, E-Pro ERA United Realty, Auctioneer, CE Author (Coweta Fayette Real Estate, Inc. ERA United Realty) For some reason they are not making this condo portion too public, but I understand this is a major change and will have a major impact on future condo sales and prices. This is why I would love to hear comments from our mortgage folks.