Florida Condo Financing Approvals by Fannie Mae Increase by 40%

""Fannie Mae"":http://www.fanniemae.com has approved 123 new Florida condos for financing in the first eight months of 2010, a 40 percent increase from 2009. It's an even bigger jump from 2008 when zero projects were accepted, according to a report from the Florida-based real estate consulting firm ""Condo Vultures LLC"":http://www.condovultures.com.
[IMAGE] Florida's real estate crash, which began in 2007, has made financing difficult. Few lenders have wanted to originate new mortgages as prices drop and foreclosure rates increase, according to the licensed Florida sell-side brokerage ""CVR Realty"":http://www.cvrrealty.com/.

More than 250,000 foreclosure filings secured by $62.5 billion in mortgages have been initiated in the tri-county South Florida region since the crash, and lenders have repossessed more than 100,000 properties in Miami-Dade, Broward, and Palm Beach Counties, according to the Condo Vultures Foreclosure Database. In due course, condo financing has suffered in the state.

""Fannie Mae has made a seismic policy shift in its outlook for new Florida condos,"" said Peter Zalewski, a principal with Condo Vultures. ""Today, Fannie Mae is approving

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projects at a pace of more than 15 condo applications per month. As encouraging as the pace may seem, lenders are still not openly originating mortgages for buyers of new Florida condos as some might expect.""

If new condominium projects fail to receive Fannie Mae approval, they are virtually locked out of the record low interest rates of conventional financing. This usually means lower prices for sellers because the only buyers available demand discounts, according to industry watchers.

Condo Vultures says Fannie Mae's approval is essential for financing since it is one of the largest purchasers of mortgages in the secondary market. Since 2009, Fannie Mae has acquired or guaranteed more than $1.2 trillion in mortgages.

Condo Vultures also contends that loan originators often tailor their mortgages to be Fannie Mae-compliant to improve chances of reselling the financial instruments on the secondary market rather than maintaining the loans in their portfolios.

""Since January 2010"":http://dsnews.comarticles/fannie-mae-launches-program-to-boost-florida-condo-market-2010-01-07, Fannie Mae has attempted to reverse the financing issue with new ""special approval"" requirements specifically for Florida condominiums.

""This new initiative is geared toward providing maximum support for Florida's distressed condo market as we continue to provide liquidity to the housing market more broadly,"" said Karen Pallotta, EVP of the single-family mortgage business at Fannie Mae. ""The state's condo market has been particularly hard hit by the housing downturn, and we're working with the industry and our partners to do all we can to stabilize the market and help spur recovery.""