Nationally, condos and condo-style townhouses have come under increased pressure by lenders. Most of this is due to over-building and high rates of default in other US markets, causing Fannie Mae, Freddie Mac and FHA to tighten some requirements for Condo Complexes. Here are a few of the major changes we are seeing:
· Owner-Occupancy - minimum rate of owner-occupancy is now 51% for conventional loans, as well as for FHA. Sometimes this can be waived on a conventional loan if the property will be owner occupied. It cannot be waived for FHA, or conventional Investors.
· Loan-to-Value - for loans with LTV over 75%, we are seeing about a .25% rate adjustment.
· "Walls-In" Insurance Coverage - Lenders are now REQUIRING this type of coverage
· "Condotels" - lenders are carefully scrutinizing complexes in resort areas to determine if they allow nightly rentals (if management "promotes or assists" nightly rentals in any way, offsite or online, the loan will be very difficult to obtain).
· New Construction Condos have changed dramatically – particularly the Pre-Sale requirements, which are now 70%.
Thursday, May 28, 2009
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