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Fannie Mae Gets Stricter On Condo Loans

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By SHANNON BEHNKEN

sbehnken@tampatrib.com

Published: February 6, 2009

TAMPA - Buyers eager to snatch up deals on Florida condos may have to fork over bigger down payments and face more intense reviews of their potential purchases.

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.

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

In the midst of the deepest housing downturn since the Great Depression, some real estate experts wonder whether the new rules will make it 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-home buyers.

Condominiums have been particularly affected by the downturn in the housing market because so many developers built them during the 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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