Fannie, Freddie Tighten Condo Loan Reviews for 40% of Mortgaged Purchases Starting Aug. 3
Updated
Updated · CNBC · Aug 1
Fannie, Freddie Tighten Condo Loan Reviews for 40% of Mortgaged Purchases Starting Aug. 3
3 articles · Updated · CNBC · Aug 1
Summary
Aug. 3 rules from Fannie Mae and Freddie Mac will push many condo mortgages into full project reviews, replacing streamlined checks for roughly 40% of financed purchases.
Lenders will scrutinize association reserves, finances, insurance and building condition more closely so loans can qualify for sale to the two mortgage giants.
Trade groups and lenders say the shift will slow approvals and could disqualify some buildings that previously passed limited review, giving cash buyers an advantage in competitive deals.
Buyers denied a Fannie- or Freddie-eligible loan may still find portfolio financing, but often at a higher rate or with a larger down payment.
The tougher standards extend a post-Surfside crackdown; another rule taking effect Jan. 4 will generally raise required condo reserve funding to 15% from 10%.