CONDO’S SEEING A LIFELINE

It’s been no secret that condominium complexes have been a sinking ship. In addition to a dearth of buyers, lenders have been running away from condos (mostly because of…a dearth of homebuyers).

Now that (hopefully) the housing market is starting to show signs of improvement, condo lending should also improve. Slowly.

Fannie Mae recently reported that they will now review the condo market, particularly in Florida, one of the hardest hit states. It’s important to note that not all loans for condos require a 25% down payment. In fact, there are still lenders offering products, for a Fannie/Freddie loan, on a condo with less than 25% down payment. The other issue to keep in mind, however, is mortgage insurance. Remember, for most conforming loans with less than 20% down payment, the borrower is either going to require a first mortgage with no more than 80% LTV and then a second mortgage for the balance of the loan (something very difficult to find these days) or going to require mortgage insurance. The mortgage insurance companies are perhaps even more conservative when it comes to condominiums.

Hopefully guidelines will loosen up sooner and lenders and the secondary market will continue to help the condo complexes that have been suffering the most.

12 January 2010 | Programs | Comments

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