New Guidelines for Condo Mortgages

New Guidelines for Condo Mortgages

Fannie Mae has added new guidelines that might make it more difficult for condo developers to sell their units, The Wall Street Journal reports. As of March 1, the government-backed mortgage finance company has stopped guaranteeing mortgages in condo buildings where fewer than 70 percent of the units have been sold, up from 51 percent. Also, Fannie Mae will not back loans for sales in buildings where 15 percent of current owners are delinquent on association fees or where more than 10 percent of units are owned by a single entity. So far, Freddie Mac has not announced any similar guidelines.

The Journal also reports that both Fannie Mae and Freddie Mac will increase fees on condo buyers effective April 1. Buyers who do not make a down payment of at least 25 percent will have to pay closing-cost fees of 0.75 percent of their loan, regardless of their credit score. The companies say these fees are necessary to protect against defaults.

The Boston Luxury Real Estate market feels the crunch as high down payments are less affordable, jumbo loans are hard to get and mortgage regulations for the Boston condos are tightening. Maybe instead of investing in failing companies as AIG, Ford and GM, the government will back up and insure loans for primary residences with less than 25% down payment and will make these properties available to many more buyers.

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