Comments on: The Catch-22 Impact Of New Fannie Mae (FNMA) Condominium Lending Regulations

By: Massachusetts Real Estate Law Year In Review: Top Posts Of 2009 And Predictions For 2010 | The Massachusetts Real Estate Law Blog

Fri, 19 Feb 2010 16:15:32 +0000

[...] The Catch-22 Impact of New Fannie Mae Condominium Regulations. In January, Fannie Mae was the first government agency to drop a big bucket of cold water on [...]

By: D

Tue, 02 Feb 2010 21:47:22 +0000

We are trying to sell a condo in Rockville, MD. We have a very qualified buyer with 20% down and who makes much more than enough to afford the mortgage, but now we are running in to loan problems because of owner occupancy vs rent-to-own. So my question is how can they get the % up if no one will give the buyers loans? Are we stuck in this condo until the rules change? This unit is an MPDU (Moderatley Priced Dwelling Unit) as well so the price is much much lower than the other units…

By: tes

tes — Tue, 02 Feb 2010 06:27:26 +0000

i am trying to buy a condo in atlanta i start the procces in november now thye said i need ho6 policy i am willing to buy that the policy they have toled me the last miniut befoe closing. saying that shoud incloud in master policy.i haven not heard any hoa has that.finally i told by my loan officer BOA have aproblem to procces two insuranc policy. can you please help me with problem
tes

By: Can I Buy a Santa Maria Condo with FHA Financing? « Vandenberg AFB Homes Blog, Santa Maria, Orcutt, Lompoc & Vandenberg AFB Houses, Homes, Condos & Real Estate For Sale

Thu, 28 Jan 2010 14:24:25 +0000

[...] Fannie Mae enacted guidelines in early 2009 which have impacted the condo market tremendously. These guidelines were meant to encourage owner occupancy and stability in condo associations but in many instances [...]

By: Richard D. Vetstein, Esq.

Richard D. Vetstein, Esq. — Wed, 27 Jan 2010 16:51:57 +0000

Anthony, sorry but ethically I cannot provide legal advice through the blog. You should contact a real estate attorney out in San Diego to help you out. Let me know if you need a recommendation.

Rich

By: Anthony

Anthony — Tue, 26 Jan 2010 20:48:07 +0000

Hi Richard,
I just got an offer accepted on a little condo in San Diego. I have to go with a homepath loan due to lack of available money down. The complex is not FHA approved. I do not know very much about the loans and procedures. Can you provide any advice on what type of research I should do on my own to protect myself as a buyer? Thanks for your help!

By: Mike U.

Mike U. — Tue, 26 Jan 2010 17:54:20 +0000

So if the building is more than 20% non-residential, is there no need for the 10% reserve fund…since it will be ineligible for the funding programs anyway?

By: Richard D. Vetstein, Esq.

Richard D. Vetstein, Esq. — Mon, 14 Dec 2009 21:43:25 +0000

Chris, I used to live at one of those condominium complexes while attending Miami University in Oxford, OH. Were parents purchasing condo units for their children, then selling them once the kid graduated? Weren’t they really investment properties for the parents anyways?

Rich

By: Chris Walton

Chris Walton — Mon, 14 Dec 2009 21:17:59 +0000

Richard,

I own a company that manages a condominium community in Athens Ohio called University Commons. The residents are Ohio University students and the owners are current or previous residents parents. There are 132 units and we have an on-site office to manage the property. The association currently has 0% delinquency and good solid reserves. There have been no foreclosures or short sales. Although the property is now 18 years old, it is in excellent condition and still very popular with the students. Up until this year University Commons has been an FHA approved property, but now it is no longer approved with HUD stopping all “Kiddy Condo” FHA loans. This will eventually turn University Commons into an entirely investor owned property. This is an example of how the system is failing to reward and even punishes banks, community associations, management companies and individuals that do the right thing.

By: Attorney Richard D. Vetstein’s the Massachusetts Real Estate Law Blog Quickly Becomes Top Massachusetts Legal Blog | RealPro Training & Consulting, LLC

Mon, 30 Nov 2009 15:42:15 +0000

[...] The Catch-22 Impact Of New Fannie Mae Condominium Lending Regulations [...]

By: Powersiteblog.com Features Richard Vetstein and the Massachusetts Real Estate Law Blog | Richard Vetstein

Mon, 30 Nov 2009 15:36:41 +0000

[...] The Catch-22 Impact Of New Fannie Mae Condominium Lending Regulations [...]

By: Attorney Richard D. Vetstein’s the Massachusetts Real Estate Law Blog Quickly Becomes Top Massachusetts Legal Blog | Hestia Financial, Inc.

Mon, 30 Nov 2009 15:30:07 +0000

[...] The Catch-22 Impact Of New Fannie Mae Condominium Lending Regulations [...]

By: Robert Robinson

Robert Robinson — Fri, 20 Nov 2009 05:34:25 +0000

I am considering buying a condominium that is 100% owned by a builder.
I have excellent credit and more than 20% down payment. The builder has approximately 30% more homes to build and sell to complete the entire project.
Currently, 80% of the model homes were purchased through FHA. Will the builder
be able to continue to offer FHA loans?
Will financing be harder and more expensive If I do not commit to the new FHA regulations untl after December 6, 2009?

By: Mike Tartamella

Mike Tartamella — Thu, 29 Oct 2009 19:28:26 +0000

Stephen, I had a similar question and was able to reach someone at FHA. The 10% is based on the yearly income. You basically need at least 10% of that yearly income in the reserves account. Should not be a problem if your association has any sort of account with some money in it. In addition, your reserves should also be able to cover your deductable for the master insurance.

Example (as it was explained to me): $17,000 income (condo fees, investments) x 10% = $1,700 minimum needed in reserve account

By: Daniel Routhier

Daniel Routhier — Thu, 22 Oct 2009 13:25:22 +0000

I am on the board of a condo in Florida. Is it possible for our building to be proactive and get our building certified by Fannie Mae? After reading your article I tried contacting Fannie Mae, they refered me to approved lenders. I have contacted several approved lenders and after spending a great deal of time, have made no progress.

By: Stephen H. Deutsch

Stephen H. Deutsch — Fri, 16 Oct 2009 19:24:15 +0000

Does the 10% of its budgeted income requirement designated in a capital reserve fund for replacement reserves mean a 10% contribution each year? Could this apply even if the reserve has reach a level of 5 times the budgeted income? 100 times?

By: Richard Brown

Richard Brown — Sat, 10 Oct 2009 12:29:10 +0000

I am the president of a fully occupied 12 unit condominium built in 1971 in another state. We have one owner who owns two units remodeled into one dwelling for personal use only. We also have no reserve fund as we pay all over budget expenses by special assessments. Will a prospective unit buyer face Fannie Mae related loan application problems?

By: Mani

Mani — Mon, 05 Oct 2009 17:02:05 +0000

I was curious if one or more of the above listed FNMA condo rules apply to the HOA associated with town homes, where the HOA dues range from $35 to $55 per month.

By: New FHA Condominium Lending Regulations Guidelines Go Into Effect | The Massachusetts Real Estate Law Blog

Fri, 02 Oct 2009 01:58:10 +0000

[...] a new stricter approval process for condominiums to be eligible for FHA financing. Like the Fannie Mae regulations issued earlier in the year, the new FHA guidelines will surely slow down condominium mortgage [...]

By: Rhett

Rhett — Wed, 30 Sep 2009 18:35:23 +0000

I own a condo in Chicago in a mixed-use 3 story building. Each floor is one unit, ground floor is retail space. Commercial is therefore 33%. We don’t have 20% equity so local banks won’t refinance us. We are trying to sell the unit but Fannie Mae/Freddie Mac won’t underwrite it, we’ve had a buyer looking to put 20% down and was denied. They went to many, many banks and none would touch it. Can we get our condo or building approved by FHA and send them to banks that will do FHA loans? Very scared that this makes our unit unsellable/worth $0. Should we foreclose if the government-backed FM/FM says it is worth nothing even if appraised at $380k? Very distraught we put a lot of money into it.

By: Richard D. Vetstein, Esq.

Richard D. Vetstein, Esq. — Sat, 26 Sep 2009 20:25:35 +0000

Wilhemina, the best bet for your buyers is to go to a small local bank which doesn’t sell their mortgages on the secondary mortgage market.

By: Irina

Irina — Wed, 23 Sep 2009 22:13:28 +0000

If the condo unit you want to buy is FNMA REO, and it says that the property is approved for Homepath Loan and is listed on Homepath website, can I buy it with a Homepath loan? I know for sure that the condo building doesnt qualify going by above specification, but for some reason it is on their Homepath approved list and so are many condos that don’t seem like they would qualify.
Does different criteria apply to FNMA owed REOs? Can I safely put an offer on the property and not worry that the condo won’t get approved?

By: Sara

Sara — Wed, 23 Sep 2009 21:23:05 +0000

We have a qualified buyer for our condo. The building has two commercial units on the first floor and four condo units on the top floor. We’re at 37% commercial. Our buyer can’t get any loan based on the commercial space. We have to sell. 800 sqft condo and we have two small children. We’re in a suburb of Chicago. Please let me know if we have any options.

By: Bill

Bill — Tue, 01 Sep 2009 20:43:50 +0000

I’m in the process of trying to buy a condo/condex. It’s basically a duplex, and each unit is owned seprately. I’m renting one side now, and am trying to buy it from the landlord. The other unit is owner occupied. I’m having a hard time finding a lender. Do you know if this type of property is FNMA approved?

By: Richard D. Vetstein, Esq.

Richard D. Vetstein, Esq. — Thu, 13 Aug 2009 14:40:09 +0000

Wilhemina, the best bet is for the buyers to go to a small local bank which doesn’t sell their loan to Wall St., and is therefore, not bound by the FNMA regulations. Good luck!

By: Wilhemina

Wilhemina — Tue, 11 Aug 2009 21:20:16 +0000

We are in another state and our buyer’s loan was denied due to the management company not having 10% in reserves. Not only was it a painful and stressful process, it ended up being denied in the end. Where can the buyers now go to find a loan and how do they know if the bank will or will not require all the FNMA requirements?

By: Richard D. Vetstein, Esq.

Richard D. Vetstein, Esq. — Mon, 10 Aug 2009 13:41:25 +0000

Thomas, raising the bond coverage should not be a big deal–it’s a matter of increasing the coverage (and paying more however). Perhaps you should intervene with the insurance agent and the trustees. The time it will take to get the coverage in place will be less than the time it will take to process an exemption. Good luck.

Richard D. Vetstein, Esq.

By: Tmalone

Tmalone — Sun, 09 Aug 2009 03:37:13 +0000

Dear author.
My wife and I found a worthy buyer for our condo. She used Fannie mae. She received the apprval letter from them so we could close. The day before closing we received a call letting us know of an issue with fidelity bonds or known as employee dishonesty bonds.
No one saw this coming.
We are now two weeks past the date and are making little progress as
to how to solve this. Our condo would need to raise their bond coverage, or this will not go through.
To your knowledge, is there anything I can do to either help solve this or get around it in regards to Fannie? Can an exemption be filed?
Thank you in advance.

By: Guest Blogging on Boston.com | Richard Vetstein

Guest Blogging on Boston.com | Richard Vetstein — Thu, 30 Jul 2009 03:52:38 +0000

[...] the project left incomplete and riddled with defective and poor quality work, or [...] […]The Catch-22 Impact of New Fannie Mae Condominium Lending Regulations July 1, 2009Recent Fannie Mae (FNMA) condominium lending regulations are beginning to live up to [...]

By: Guest Blogging on Boston.com | The Massachusetts Real Estate Law Blog

Guest Blogging on Boston.com | The Massachusetts Real Estate Law Blog — Thu, 23 Jul 2009 19:49:45 +0000

[...] on timely topics affecting Massachusetts real estate law, including home improvement projects, condominiums, landlord-tenant issues, and more. I am thrilled for the opportunity. Stay tuned for [...]

By: Richard Vetstein

Richard Vetstein — Thu, 23 Jul 2009 14:50:19 +0000

John, I think going to a smaller bank is your best best. Otherwise, you could apply for an exemption from the regulations through your lender. Probably would be a royal pain in the you-know-what. The argument is that the HOA is so small that the FNMA regulations were not intended to cover it, especially given the likely situation of the developer retaining ownership of a unit (or 2) in a 3 unit project. As long as the condo is in good financial health (sound reserves, solid budget, no unpaid assessments, etc.), you could make a decent case. Best of luck!

Rich

By: John

John — Thu, 23 Jul 2009 14:31:52 +0000

Here is another catch 22 with the new guidelines. I am in a 3 unit condo association in Harvard square in Cambridge, MA.The guideline stating no one owner can own more than 10% of the units does not jive with my HOA. My HOA consists of 3 units, I own one and the original developer owns the other two since 2005. He rents the apartments for well above his mortgage payment. Now I am trying to refinance and can’t find a lender that will loan outside of the new guidelines. Any suggestions to get around this? Finding a local bank that will keep the the loan in their portfolio looks like the only way???

By: Richard Vetstein

Richard Vetstein — Wed, 22 Jul 2009 13:30:30 +0000

Dennis, I sympathize with your daughter’s plight. This is exactly the Catch-22 that I wrote about in my post. I assume that your daughter is running into the 70% pre-sold/sold requirement as well as the developer occupied unit rule. Unfortunately, she is at the mercy of the buyer’s bank/mortgage company. Perhaps the buyer could obtain financing from a smaller bank who is not hand-cuffed by the FNMA requirements (that is, they don’t sell their mortgages on the secondary market). I hope it works out!

By: Dennis Laux

Dennis Laux — Tue, 21 Jul 2009 19:26:46 +0000

My daughter is living in Germantown,Md with her husband of one year. She recently lost her job with a Fortune500 Co., a victim of this recession. She has signed papers to sell her condo. in Pilly to a very capable party[high income and approved for over 2 months for the loan] Now one week from closing this Fannie Mae Condo. Lending Regulation has thrown a wrench in the works. The unit is a totally renovated building with 5 units, one being occupied by the contractor who renovated the building. This sale is now questionable, what can she do? Also, with no job, no income, and no savings, the she has no way of maintaining the condo. This outcome could be devistating. It puzzles me that a sale pending to a very good buyer can’t be consumated. Please help.

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