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from Local Attorney, Michael H. Wasserman

Wednesday, March 18, 2009

(EVEN) Tougher Sledding for New Construction Condo Projects

According to today's Wall Street Journal (subscription required)

Fannie Mae has tightened credit for buyers of condominiums. The new rules are going to hit new construction condo buildings especially hard.

Effective as of March 1:

  1. Has stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have sold (previously it was guaranteeing the loans as long as at least 51% had sold)
  2. Won’t back loans for sales in buildings where 15% of current owners are deliniquent on HOA fees
  3. Won’t back loans where more than 10% of units in the building are owned by a single entity

Freddie Mac has apparently not tightened its lending standards- yet.

Both Freddie and Fannie, however, are going to increase fees.

Starting in April, buyers without at least a 25% down payment will have to pay closing-cost fees equal to 0.75% of their loan even if the buyer has an outstanding credit score.