Orlando Area Real Estate News

Florida’s condominium market is getting some attention from Fannie Mae, which is granting “special approval” status to hundreds of condominium properties. A team of six Fannie Mae assessors in Florida will review hundreds of condo properties across the state that don’t currently meet Fannie Mae eligibility guidelines and will review requirements like occupancy rates and financial stability. Those granted special approval that did not previously meet guidelines, will be eligible for Fannie Mae-backed mortgages. Two experts on the South Florida market said the move is a step in the right direction, but is certainly not a cure-all. Normally, Fannie Mae requires that up to 70 percent of a new project’s units be presold and no more than 49 percent be owned by investors, while no more than 15 percent of the unit owners can be 30 days late paying association fees. Waivers have been granted on a case-by-case basis through the Project Eligibility Review Service, which launched last year. The announcement Thursday streamlines the process for lenders and catalogues projects across the state that are Fannie Mae-eligible. Projects deemed eligible will be listed on www.eFannieMae.com as project reviews are completed. Qualified borrowers wishing to purchase units in these projects will be eligible for financing. “This new initiative is geared toward providing maximum support for Florida’s distressed condo market as we continue to provide liquidity to the housing market more broadly, said Fannie Mae’s Karen Pallotta in a statement. “The state’s condo market has been particularly hard hit by the housing downturn and we are working with the industry and our partners to do all we can to stabilize the market and help spur recovery.” Moe Veissi, National Association of Realtors First Vice President and broker-owner of Veissi & Associates in Miami said in a statement, “NAR applauds Fannie Mae for taking this important step to make condo loans more readily available in Florida. Our state is probably the hardest hit as far as the condo market is concerned, and Fannie Mae’s new effort to take a closer look at project eligibility could go a long way to putting projects back on a healthy financial track.” Grant Stern, of Morningside Mortgage Corp. in Bay Harbor Islands, said the move is a step in the right direction, but there’s still a need for a secondary market for the mortgages. Fannie Mae is dealing with the aftermath of a decision last year that made Florida an exception market for condo lending. “Last year, they went Herbert Hoover on the condo guidleines, and made them entirely too tight,” he said. “Fannie Mae has so damaged its lending program for condominiums that very few lenders even want to issue the loans. Even in the buildings that are Fannie Mae approved, you still can’t get private mortage insurance, so you still need a 20 percent down payment.” “This won’t put Humpty Dumpty back together again, but maybe we’ll find a few pieces,” he said. Peter Zalewski, managing principal for Condo Vultures in Bal Harbour, said even in circmustances where Fannie Mae has given approval for a building, “the lender will often find excuses not to provide funding.” At the end of the day, the financing is just not there and flowing, he said. He sees the latest move as bringing in the cavalry, but it still has a long road to ride. Zalewski, who deals mainly with cash purchasers, finds that buyers who need financing often have to pay a 15 percent to 20 percent premium because sellers realize a deal may fall through months later. The special approval designation is granted for periods of between nine months and 18 months. It can be assigned to existing condominium properties only. The move by Fannie seems to support concerns voice in a June South Florida Business Journal article that reported that U.S. Rep. Ron Klein was ready to seek funding for more staff at Fannie Mae to plow through a backlog of project eligibility reviews for condominium buildings. Fannie Mae’s official response at the time was: “We aren’t aware of any significant backlog.” Klein said he heard from bankers and developers – and even Fannie Mae officials themselves – that processing a flood of waiver requests is a tall order for six Fannie Mae employees in Washington, D.C. Charlene Bender, senior VP at Regent Bank in Fort Lauderdale, said waiting for waivers was a problem for some bulk buyers interested in local condo buildings. Bender asked Klein about his progress on the issue at a luncheon sponsored by law firm GrayRobinson, P.A. at Fort Lauderdale’s Riverside Hotel. Klein assured the audience he would seek to add as many as 20 staffers to help move the process along. All contents of this site © American City Business Journals Inc. All rights reserved.

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