For those of you who market new condo projects you may have noticed that it is becoming ever increasingly difficult to obtain financing for those clients who need a mortgage.
So why the sudden change or difficulty in obtaining financing? With market conditions being unfavorable Fannie Mae and Freddie Mac have put in place more stringent guidelines for condominium projects. In the past, projects that were only partially completed could often still qualify for conventional mortgage financing. This is true even though the project was still subject to additional phases and may not have been turned over to the homeowners association.
With the recent changes by Fannie and Freddie, lenders are now responsible for determining the eligibility of a condo project based on several criteria (I will go over specific details in post to follow). In many cases, projects will be ineligible for traditional financing leaving the borrower with few, if any, choices for the condo of their dreams. So what's a buyer to do?
A solid experienced lender (such as myself, nothing like shameless self promotion) can generally still find a way to obtain financing for these borrowers. As a bank, we have a portfolio and are more than willing to make mortgage's on incomplete condo projects for borrowers who are credit worthy. Terms that are available will vary based on borrowers down payment and credit history.
In an additional note, many of the PMI companies have stopped insuring incomplete (non-warrantable) condo projects. However, a properly structured loan can often times still allow for a smaller down payment and a low fixed rate on a conventional mortgage.
Incomplete condo projects are generally unacceptable for FHA financing. If a lender tells you otherwise or that a "spot" condo approval is possible it is highly unlikely. Simply put, while FHA allows for "spot" approvals on condo projects, there is no incomplete (non-warrantable) project that will make it thru the spot approval process.
If you market condo projects, we should talk about how my team and I can offer financing to your clients. As a Federally Insured Thrift, we have the ability to lend in nearly all of the 50 states.
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