Fannie Mae is reviewing hundreds of condominium projects in an effort to allow them to become eligible for Fannie Mae loans through a new "Special Approval" designation.
These new reviews were prompted because many condo buildings haven't been able to meet Fannie Mae’s established rules relating to financial reserves, number of owners delinquent on association fees and the percentage of owner-occupied units. If people were interested in purchasing a condo they had to pay cash or find other ways to secure financing if the building didn't meet the criteria. With little to no financing available to potential condo buyers, the condo market has seen significant price decreases.
Some, like Craig E. Polejes, president of Florida Bank of Commerce, aren't sure if loosening the lending requirements is the right thing to do. He asks “If they’re looking to make exceptions on a case-by-case basis, what are the parameters of the exceptions?” Polejes added, “The overriding issues should be the quality of the building and the creditworthiness of the buyer.”
So far, Florida is the only state getting these special reviews. Condos on their “approved” list can be found at www.efanniemae.com under “frequently searched pages.”
What do you think of these reviews? Do you think that it will improve condo sales?
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