In a recent article by Florida-based real estate consultancy Condo Vultures published an article on their website regarding Fannie Mae and the steady increase of Fannie Mae approved new condos for financing in Florida. Here are the many points of the article:
âFannie Mae, the behemoth public-private mortgage company, has approved 123 new Florida condos for financing in the first eight months of 2010, a stark contrast to 2008 when not a single project was accepted, according to a new report from CondoVultures.com.
New condo project approvals for financing in 2010 have already risen by more than 40 percent compared to 2009 when 87 projects were deemed acceptable for mortgages by Fannie Mae. No new Florida condos were approved for financing in 2008 after 27 projects were approved in 2007, according to the report based on Fannie Mae data.
New condominium projects that fail to receive Fannie Mae approval are virtually locked out of conventional financing where interest rates are at record lows. A lack of available financing typically means lower prices for sellers as the only would-be buyers have all cash and demand deep discount to transact deals, industry watchers said.
âFannie Mae has made a seismic policy shift in its outlook for new Florida condos,â said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo VulturesÂ® LLC. âBack in 2008, Fannie Maeâs underwriters failed to approve a single new Florida condo for financing. Today, Fannie Mae is approving projects at a pace of more than 15 condo applications per month.
Fannie Maeâs approval is essential for financing as the federal-chartered entity is the one of the largest purchasers of mortgages on the secondary market from loan originators.
In the first half of 2010, Fannie Mae acquired or guaranteed more than $420 billion in loans. Since 2009, Fannie Mae has acquired or guaranteed more than $1.2 trillion in mortgages, according to a recent Fannie Mae statement.
Fannie Maeâs voracious appetite for mortgages is what permits the Washington, D.C.-based entity to set the criteria for what loans it will purchase from lenders.
Loan originators, in turn, tailor their mortgages to be Fannie Mae-compliant to better improve the chances of reselling the financial instruments on the secondary market rather than maintaining the loans in portfolios.
Since January 2010, Fannie Mae has attempted to reverse the financing problem by developing new âspecial approvalâ requirements specifically for Florida condominiums.
To implement the program, Fannie Mae created a six-member team of underwriters who are versed in the âspecial approvalâ criteria and sent them out to evaluate Florida condos. It is this team that has approved more than 120 condos in 2010.
âThis new initiative is geared toward providing maximum support for Floridaâs distressed condo market as we continue to provide liquidity to the housing market more broadly,â Fannie Maeâs Karen Pallotta, Executive Vice President of Single Family Mortgage Business, said in a statement.â
The aforementioned increase in Fannie Mae approved new Florida condos described in the above article is one more clear indication that the real estate market is well on its way to stabilization and strengthening. All signs are positive and market trends continue their upward momentum.