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Saturday, July 18, 2009

Jim the Realtor on High Rise Condo Project

by Calculated Risk on 7/18/2009 08:38:00 AM

Jim the Realtor takes us on a tour of the 679-unit Vantage Point complex in downtown San Diego. "They had been taking $25,000 deposits since 2004, but could only generate around 200 sales - not enough to qualify for Fannie/Freddie financing (need 70% pre-sold)."

Jim says the developer has returned the deposits, converted a part of the building to apartments - and is now to trying to sell again at a lower price - that Jim thinks is still too high.

Note: these new high rise condos aren't included as inventory by either the Census Bureau (new homes) or the NAR (existng homes).

Here is some info on the condo lending rules from the WSJ on June 22nd: Changes Urged to Rules on Condo Loans
In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won't purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.
Fannie Mae officials say the new rules haven't been as taxing as some claim. The mortgage company said the 70% rule doesn't apply to loan applications submitted through an underwriting program used by major lenders, and that hundreds of projects submitted through that program since March 1 have been approved even though their sales levels are below 70%. Developers are also able to apply for exemptions to the new policies for loans that are manually underwritten.
Fannie and Freddie have also boosted fees on mortgages for condos. Buyers without a minimum 25% down payment have to pay closing-cost fees equal to 0.75% of their loan, regardless of their credit score, under new rules that took effect in April. Fannie has said it will drop that fee in August for cooperative apartments and detached condos.