The following information is offered to help you understand the dynamics of the Fort Lauderdale Real Estate market.

This article was written by Howard J Sobel of Coldwell Banker Home Loans.  I make no claim as to ownership or authorship of this material.  It is simply provided to help educate my customers, and it may have been excerpted.  Articles and/or excerpts presented here do not necessarily reflect my opinion or that of Coldwell Banker Residential Real Estate.

Have a question about anything at all related to Fort Lauderdale real estate?  Email me now for a quick response.

The Condo Quandry

What it takes to Mortgage a Condo in Today's Market

By Howard J Sobel
September 2009

Current Guidelines

• Mortgage Insurance Companies do not want to insure any condominiums in declining markets. Because of this condos that are not FHA or VA approved require 20% down.
  
  
• FHA approved Condo’s do allow for the minimal 3.5% down payment.
  
  
• VA approved Condo’s allow for a 0% down payment.
  
  

Conventional/Fannie Mae Condo Guidelines:

• 20% down payment
  - All residence types require full FNMA Condo Project Approval.
  
  
• 25% down payment
  - Primary Residence only – limited review permitted.
  - All other residence types require full FNMA Condo Project Approval.
  
  
• 30% down payment
  - Secondary Residence and Primary Residence – limited review permitted.
  - All other residence types require full FNMA Condo Project Approval.
  

What is Condominium Project Approval?

The lender verifies that the condominium from a project perspective meets
minimum standards. Main questions to be answered include items like:

• Is the project financially sound without use of special assessments?
  
  
• Does the project allow for adequate unit owner and lender rights?
  
  
• How soon will the project be complete and turned over to unit owners?
  
  
• Is the project located in Florida and either new construction or a recent condo conversion?
  
  
• Are there any situations or amenities that may make the project ineligible such as rental
  desk, onsite maid service, or current HOA litigation?
  

All General Eligibility Requirements:

• All units, common elements, and facilities must be 100% complete and not subject to additional phasing or annexation.
  
  
• 90% of the total units in project must be sold and closed.
  
  
• HOA must have been turned over to unit owners.
  
  
• For Investment property transactions at least 51% of the total units in the project or subject legal phase must have been sold and closed to owner-occupant primary residence or second home purchasers. REO units that are for sale (not rented) may be counted as owner occupied units within the owner occupancy ratio.
  
  
• No more than 15% of total units in a project can be 30 days or more past due on the payment of their condominium/association fee payments.
  
  
• No single entity (the same individual, investor group, partnership, or corporation) may own more than 10% of the total units in the project, or if the project has 5 to 10 units only one unit may be owned by a single entity.
  
  
• No more than 20% of the total project square footage can be used for nonresidential purposes.
  
  
• All facilities related to the project must be owned by the unit owners or the Homeowners Association. The developer must not retain any ownership interest in any of these facilities.
  
  
• Each individual unit should be separately metered, if not the project’s plans should provide for the ready adoption of individual unit metering.
  
  
• All units in the project must be owned fee simple or leasehold and the unit owners must be the sole owners of and have rights to the use of, the project’s facilities, common elements, and limited common elements.
  
  
• A review of the Homeowner’s association actual budget is required to determine: the budget is adequate, provides for the funding of replacement reserves for capital expenditures and deferred maintenance (at least 10% of budget), and provides adequate funding for insurance deductible amounts.

What is Limited Condominium Project Approval?

The management company or property manager is contacted and asked the following:

• Does any one entity own more than 10% of project?
  
  
• Is there an on site rental desk or daily maid service?
  
  
• Does the project allow rentals less than 30 days?
  
  
• Is condo 100% complete?
  
  
• Is condo 90% sold and closed?
  
  
• Is there any litigation involving the building or the association? (plaintiff or defendant)
  
  
• If no one is willing to answer the questions on the phone or without a fee a full
  questionnaire will be required.
  
  

 Viewpoints in Articles presented here do not necessarily reflect my opinion or that of Coldwell Banker Residential Real Estate.

Andy Weiser, Broker Associate
Andy Weiser, PA
Coldwell Banker
Residential Real Estate
2400 East Commercial Blvd
Ft Lauderdale, FL 33308
954-560-9667

© Copyright 2009

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