Home

New rule will make condo loans harder to get

Submitted by Admin on Mon, 02/08/2010 - 2:40pm.

By Evelyn Lee

A Federal Housing Administration rule that went into effect last week will make it more difficult to obtain mortgage loans on condominiums, according to an attorney at Greenbaum, Rowe, Smith & Davis LLP, in Woodbridge.

The rule eliminates the spot-loan approval process, where the agency had insured individual mortgages on condominiums, even those without FHA project approval. Now, the FHA — which provides mortgage insurance on loans made by approved lenders — will back only mortgages on approved condominium communities.

With FHA insuring about 30 percent of residential mortgages last year, “If you don’t have this project approval on a condominium, you’ve taken away a means of getting financing or refinancing,” said David Ramsey, partner and chair of Greenbaum Rowe’s community association practice group.

The new rule has caught the attention of developer clients, since the FHA insures loans up to around $729,000 — the same amount Fannie Mae will purchase — but requires a lower down payment and lower credit scores than the mortgage company, Ramsey said.

Of the some 6,000 condominium associations in New Jersey, about 200 or fewer are FHA-approved, according to Ramsey.

Source


» login or register to post comments | email this story |

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Good. This is one way to

Submitted by Anonymous12345 (not verified) on Mon, 02/08/2010 - 4:46pm.

Good. This is one way to eliminate disposable housing, the predatory management companies focusing on condominiums, and the endless financial issues associated with condominiums. The only people that really can enjoy them are the board members and the vendors. Since the government has failed to protect homeowners in them and has allowed board to usurp the ability of the homeowners to protect themselves, it's time to ensure that these financial black holes are terminated before any more prospective purchasers cross the event horizon. Apartments would not be permitted to intrude into the lives of residents the way that condominium associations control the lives of the owners.


» login or register to post comments | email this comment |

Excellent point. I have a

Submitted by The Dutchman (not verified) on Mon, 02/08/2010 - 5:46pm.

Excellent point. I have a condo within walking distance to the LV Strip in a two-block compound made up of ten and twelve-unit buildings. Vacancies are everywhere and the only sales are bank foreclosure auctions. As the projects' finances continue to deteriorate, I foresee entire buildings going for the price of one condo and the whole place transitioning from a CC&R collective to private apartment rentals which makes the most sense as most of my neighbors are more suited, more comfortable with a parent/child, landlord/tenant housing relationship anyway.


» login or register to post comments | email this comment |