With the recent tightening of credit with respect to real estate lending, condominium financing has become more difficult in recent months. I don't know why it is, but, generally, when real estate markets soften, condominium prices tend soften just a little bit more than those of their single family home cousins. Granted, this is a generalization, and there will be multiple exceptions to this "rule". Please let me hear about them! Banks and mortgage companies are having to abide by new FHA & FNMA guidelines for condominium financing, and there are several reasons why a condo MAY be ineligible for FHA or conventional (FNMA/Freddie Mac) financing. Some of the most common issues are listed below:
-There is a lawsuit pending against the condominium association
-There is a right of first refuasal retained by the association (FHA only)
-The development is new and control hasn't been turned over to the condo association by the developer yet.
-The condominium association that the condo is a part of is not on the FHA approved list (FHA only)
Of course, the financing landscape is changing day by day, and some obstacles, ie, the lawsuit on the association issue for one, can sometimes be overcome. Also, if a particular condo association is not FHA-approved (and this is common), it can be difficult to impossible to get an FHA loan closed on that condo. However, there is a "spot-approval" process whereby a loan officer may apply for a abridged review & approval" without going through the normal time-consuming channels for a traditional approval. Unfortunately, this spot approval process is on the way out and will no longer be available after January 30, 2010.
In determining which condo to buy (and there are some great deals out there right now) and what loan products are available to you, it is a good idea to first speak to a lender who is knowledgeable about condos. One professional I have called numerous times for help with condo financing questions is Sheila Borne of Avenue Mortgage in New Orleans, LA. Her cell # is programmed into my phone, and I call her anytime a question pops up regarding condo financing! Her contact information is below:
Sheila Borne
Avenue Mortgage
322 Lafayette Street
New Orleans, LA 70130
(504) 722-9179 Cell
(504) 525-4663 Ofc
