Let's look at some condo financing considerations...

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It’s Completely About the Derived Market –

FNMA along with FHLMC (Fannie Mae and Freddie Mac) are the most important buyers of mortgage loans within the US consequential mortgage market. In the role of, they set up risk-based standards for loans so as to can take place sold to them through lenders. These standards go beyond borrower qualification – they extend to property type and apply. If individual mortgages go through these standards, they are referred to as conforming loans. If an individual loan isn’t meeting the requirements as well as therefore can’t be sold to these GSEs (Government Sponsored Enterprises), the lender must either hold that loan within its own portfolio of investments or bundle it into commercial Mortgage-Backed Securities (MBSs). Lenders choose selling their loans to the GSEs therefore they be able to free up then re-lend that money. It must be noted at this time that portfolio loans not sold to FNMA otherwise FHLMC usually take higher interest rates toward the borrower.

So… what will this have to do with Florida condominiums? Well, the standards for eligible developments involve appraisal of the monetary health, structural integrity, legal composition, and secure management of the property.

If a structure or development doesn’t meet FNMA standards, then a loan prepared on an individual

residence unit in it resolve be non-conforming.

Lenders apply FNMA’s guidelines to determine a loan’s eligibility for being sold to a GSE at the secondary market. Nearly of the general condominium property variables include:

* Are any sections of the estate used as a hotel or

timeshare?

* Has control of the HOA been twisted over towards unit owners?

* Is there any pending legal action not in favor of the HOA?

* Does the structure or development include some

commercial space?

* Is the property a conversion or was it purpose-built

such as a condominium?

* Does the property hold sufficient insurance coverage?

* Does the HOA account have sufficent funds for projected

investment expenditures with late repair?

* Are over 10% of the units owned by one being or

entity?

* Are any HOA dues payments from unit owners overdue?

These are clearly an understanding of the standards incorporated in the FNMA secondary market eligibility framework for condominiums. There are also types of properties that are specifically not entitled and will not even be reviewed. Based on the type, size, location, and legal structure of the project, eligibility and warrantability be able to get rather involved. If you’re well-known by means of financial market investment terms, you could say that the lender-requested independent property appraisal is similar to expert analysis, while condominium project eligibility is similar to fundamental analysis.

What this means to us in the real estate business is that lenders now want a satisfactory condo eligibility analysis to be submitted including the loan application. There are a few another methods that FNMA offers for lenders to resolve condo

eligibility. These include:

* Limited Review

* Condo Project Manager (CPM) Expedited Review

* Lender Full Review

* FNMA Project Eligibility Review Service (PERS)

* Special Approval Designation (SAD) which applies

only in Florida

The procedure used is determined through variables such as whether the development is new or already established, along with

certain combinations of the other variables we mentioned above. Further, FNMA has set maximum LTVs (loan-to-value ratios and

occupancy or use restrictions for condo loan eligibilty. Down payments, rates, and terms are all influenced by the information gathered during the eligibility review.

Loans for purchases in non-qualifying buildings or improvements can be rather difficult otherwise even impossible to find. If available, they will hold extra restrictive terms (that means higher rates) because they will end up within the lender’s own portfolio, tying up that money for an extended period. On the other hand, more attractive terms are available for condo or townhouse/villa purchases in well-managed, financially strong buildings or developments because those loans would be conforming also eligible to be sold on the secondary market. Realtors® should also be aware that similar eligibility aspects come into cooperate with mortgage financing for properties in a Planned Unit Development (PUD).

For further discussion on qualifying standards, GSEs, available loan programs, finance terms, and a lot more…check out my website www.YourMortgageSolutionsNow.com, then call or send me an e-mail to discuss your particular deal.

Allow me strengthen the trust your client

has placed in you!

Wwww.YourMortgageSolutionsnow.com

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Let's look at some condo financing considerations...