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Fannie Mae Requiring More Down, Scrutiny On Condo Buys

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By SHANNON BEHNKEN | The Tampa Tribune

Published: February 5, 2009

TAMPA - Buyers anxious to snatch up deals on Florida condos may have to plunk down higher down payments and have the condominium complex scrutinized.

Fannie Mae, one of the largest providers of U.S. mortgages, is requiring more cash upfront and taking over the condo review process from its lenders. Amy Bonitatibus, Fannie Mae spokeswoman, said that's because condos are at a higher risk of failure in this economy.

"The updated review process and pricing adjustments take into account the significant oversupply of condominium units in Florida, as well as the large number of condo developments that are only partially complete or occupied," Bonitatibus said.

This more extensive review process, she said, will not slow or impede the availability of mortgage funding for qualified borrowers.

But in the midst of the deepest housing downturn since the Great Depression, some real estate experts wonder whether the new rules will make it even tougher to sell condos – especially in Florida, which historically has enjoyed a thriving condo market.

Under the new rules, Fannie Mae requires a minimum 15 percent down payment from investors and 10 percent from second homebuyers.

The Tampa Bay housing market has been hit hard by the housing downturn. Condominiums have been particularly hit because so many developers built them during the housing boom.

There are dozens of half-empty or unfinished condos in Florida's major cities, including Tampa.

The prices for condos continue to fall, though, and that's enticing some buyers into the market.

The median sales price of condos in the metropolitan area that includes Tampa, St. Petersburg and Clearwater was $128,800 in December. That's down 29 percent from $181,700. Moody's Economy.com predicts sales prices will continue to fall until at least the third quarter of this year.

Fannie Mae insists its new regulations will not hinder Florida's housing recovery. Bonitatibus said it will help stabilize communities by decreasing the risk of new buyers defaulting on their loans.

"This is consistent with the company's responsibilities to maintain a stable source of mortgage capital across the country, protect taxpayers and align our business practices with ongoing risks in the market," she said.

Reporter Shannon Behnken can be reached at (813) 259-7804.

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