Miami Real Estate

Why waste time hunting for a condo you can’t get a mortgage for?  Know the facts before you hit the pavement.    Obtaining mortgages in some Florida condos may now be virtually impossible, as a result of the new Fannie Mae rules.  

 Lenders have long  been reluctant to provide financing in certain South Florida condo buildings.  Many more buildings will now be scratched from their lists altogether,  as a result of the recently imposed  Fannie Mae rules.   

A handful of lenders  ‘blacklisted’  certain buildings… before….but these  new condo regulations, imposed in  January  2009, will  make condo FINANCING in Florida  exponentially more challenging .  Unless you are well-informed,  you risk stumbling across a ‘steal’ of an apartment, only to find it’s unattainable,  on account of rules prohibiting lenders from providing mortgages in buildings  that for all purposes appear stable.   

Fannie Mae’s rules will  create  financing hurdles at the very least!   These new rules pertains solely to Florida, and for the most part, affect  buildings MOST  in need of a vitamin B shot.   Fannie Mae’s new regulations will slam condo buildings  like the plague.  

FNMA/FHLMC changes as of January  2009 require that condo conversions and new construction  be 70%   “under contract”  or “pre-sold”  before lenders provide financing.  (Previously only 49%  of a building’s units had to be pre-sold or under contract.) 

Adding insult to injury,  if more than 15% of the building’s unit owners are delinquent  on their association fees by 30 days or more… (you guessed it!)….  no mortgages will be issued in those buildings either.  So, how do you protect yourself… and how do you know where to look, let alone where to buy?

             FANNIE MAE CONDO   GUIDELINE   “REQUIREMENTS”  FOR LOANS :

• 15% of  units (maximum) can be delinquent  (beyond 30 days) on their association fees.
• 70% of the building must be “Under Contract” or already ”Pre-Sold”.
• Seller contributions must be fully disclosed.
• The building must carry hazard insurance.
• 51% of established construction must be owner-occupied… allowing  less-than-half to be investor owned.
• 20% of the building (maximum) may be designated for commercial use.
• 10% of the units (maximum)  may be owned by any single entity.

These rules were undoubtedly put into place to strengthen the  current condo market, and protect buyers. Good intentions aside, the short term effect will undoubtedly negatively  impact South Florida’s Condo Market, at least where buyer financing is concerned. This new law  will penalize sellers,  potential  buyers and  investors… over the short run.  It will affect anyone and everyone  residing in the targeted condominiums.  Long term, the idea is  certainly to ‘help’ the situation, so let’s hope it does.

With delinquency of association fees now a condition for funding  loans, and the  plethora of buildings in trouble  (in up and coming areas like Brickell and Downtown Miami… as well as scattered across South Florida)  Florida’s financing hurdles pose potentially insurmountable  road blocks for owners desperate to sell and barely hanging on…. and are a hard pill to swallow for buyers ready to make their  move in an otherwise favorable buyers’ market,  but in need of  financing. 

Despite juicy pricing and abundant condo availability, many borrowers will be hard pressed  to get mortgages now.  

Gone are South Florida’s overinflated housing prices of a couple years back. (Good news for buyers in general!)  In a market ripe with opportunity, and reasonably priced condos available to be snatched up… there is a silver lining …  but for cash buyers!

Sadly,  for those needing financing,  many “choice” opportunities  now require  cold, hard cash.  How many “cash’” buyers  are there out there… with bills stuffed under their mattresses?   Miami Herald articles in late January were eye-opening!   And yes, the FNMA/FHLMC changes (just  now imposed) will alter the Miami skyline, giving an entirely new meaning to the term ‘bail out’.  

Buildings will need  to be pre-screened… in much the same way as  buyers and tenants themselves have been… and building  eligibility “stats” will change day by day,  fluctuating between eligible and  ineligible.   Relying on a knowledgeable  Realtor will be increasingly more important.    Don’t  waste time traipsing through properties that won’t qualify!

Visit www.MiamiRealEstateCafe.Com for more information, whether you are buying, selling, or in need of additional information.  Alexandra  Restivo 305 632-0164  and Vicki Restivo  305 793 1365 … Luxury Condo Real Estate Experts with EWM Realtors, Inc.    Call  for up-to-date information and assistance.

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