New Fannie Mae Rules for Financing Condos...Making Single Family Homes a True Value!
New rules by Fannie Mae are making it a bit more challenging to get mortgages for condominiums. The new rules are disigned to reduce the risk of foreclosures, and the timing will slow the market an a bit. With several new projects locally, it will effect the developers of the complex in re-sales if they own several units in the complex. Here are the changes, and a summary of the new rules. In general, Fannie will no longer repurchase a mortgage from a lender unless:
1. 70% of a new condo project has already been sold or is under contract. This is an increase from the prior requirement of 51%.
2. At least 80% if the project is residential space. Mixed use properties ie.. residential, commercial, shops, or office space, If 20% or more commercial, then a commercial loan would be required, and a variable rate would be the option.
3. No more than 15% of the units are more than 30 days late on their condo dues.
The sellers of established complex's, and single family homes would benefit the most from these changes. The reason...many buyers, who could otherwise qualify for a mortgage on either a home or condo will be unable to qualify for a condo loan because the way the association is set up. This could make a single family home purchase more appealing.