As lenders tighten their restrictions on getting loans, we're beginning to see a return to fiscal responsibility in lending.  This is a good thing, right?

Okay, here's my current beef.

The rules say, that Fannie Mae will not purchase loans that were made on new developments (new construction or gut rehabs), where the development (or the legal phase, if the paperwork's been properly submitted) isn't at least 70% sold and/or complete.

I have a client who's purchased a condo in a 36 unit development.  He will be unit #8 that is sold... but until 70% of the units are either finished being built (these are custom units, they complete them as clients appear), or 70% under contract... they will not release funds... in fact they will not even give us a mortgage commitment, because if they do, Fannie Mae will not buy the product on the secondary market, therefore nobody in the primary market will make the loan.

Unless you use a lender who has a portfolio product that they intend to hold (meaning, ot sell it to Fannie Mae)... ain't nobody gonna give you a loan.

Now this is only mildly annoying to my client... who now, cannot purchase the condo he wants to buy... but I can't imagine how annoying this is to the developers... who are sitting with incomplete, unsold buildings... unless they can find cash (true cash) buyers.

Yikes!