Banks Easing Loan Requirements for Condos

Much of the reason for the current over correction in condominium prices has been the lack of available lending due to tightening of lending guidelines for condominiums.   I was recently quoted in an article titled Condo groups in financial pain which appeared in the Sarasota Herald.  It now looks like Fannie Mae may have figured out that if thier over reaction the the market’s decline is part of the reason for the high rate of foreclosures among condos.  The logic is simple; if no mortgages are available to a particular condominium than current owners needing to sell but who cannot afford to sell to cash-only speculators will be forced into foreclosure by the same rigid lending requirements which are intended to stem foreclosures.

Fannie Mae will now allow condominiums which have been denied “approved status” to make application for approval.  Fannie Mae will review the condominiums financial stability, occupancy rates, physical condition and association dues to determine if approved status is warranted.  If deemed sound, condominiums will be granted approved status for up to 18 months.  This is a much needed change which will have a positive effect the values of  condominiums previously denied lending and a boon to those savvy cash investors that have purchased into previously denied projects.