6 Critical Real Estate Lending Changes That Make Condos Harder to Sell

6 Critical Real Estate Lending Changes That Make Condos Harder to Sell

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These past two years have been absolutely incredible for sellers in the real estate market. Thousands of condo owners have cashed out hundreds of thousands of dollars above their asking price as buyers desperately attempted to purchase new homes in a supply constricted market. The good news is that this trend is still current - if you've thought about selling your condominium, now is a great time.
As always before your sell, it is imperative to be prepared in order to get the full value of your home. This includes staying up to date with market trends and regulations, especially if you are looking to sell a condominium. If you have thought about selling your condominium recently, there are important market updates that you absolutely need to know.
 
Because of the recent tragedy in Miami, Florida with the collapse of the Champlain Tower Condominium, major mortgage lending companies Fannie Mae and Freddie Mac have established new guidelines for all condominium owners looking to sell. This pertains to condominiums 20 years or older with a minimum of 5 units.

Managing Director at CHARLESGATE, Michael DiMella, recently sat down with Rosella Campion from Loan Depot to discuss the new regulations. 
 
Watch the conversation and see what we learned in the summary below: 
 
 

New Lending Guidelines for Condos:

Based on the new lending guidelines, it will become a lot more difficult to sell a condo without the following items:

  1. A Certificate of Occupancy - new construction is required to be signed off on by local building departments prior to occupancy. There will no longer be any exceptions allowed by lenders. 
  2. Major lending companies will no longer be allowing deferred maintenance or a seller to pay a special assessment at closing. Sellers will still be allowed to pay in advance if the special assessment is not deferred maintenance, safety or affecting the habitability of the unit.
  3. Must have 1 million liability insurance. No blanket insurance policies will be allowed for multiple buildings within an association.
  4. It is required that 10% of the Associations Income must be allocated for Capital Improvements.  An engineering study is no longer enough and the association will still require 10% in reserves. Looking ahead: It is also expected that a separate line item for general maintenance will be required.
  5. Appraisers will be required to comment on the condition of the building. They will specifically be looking for unsafe, unstable items or anything causing direct damage to units. Meeting minutes may be reviewed, specifically looking for any deferred maintenance items.
  6. There must not be any current lawsuits against the developer for construction defects.
 

Advice for Condo Owners:

With these new guidelines, it may seem overwhelming to think about managing your condominium or possibly selling it. We've put together the following recommendations to make sure you are prepared:

 

Thinking of selling your condo this year?

Ask us for a free condo association assessment to make sure your condo meets all required lending guidelines.

Rosella Campion and her team at Loan Depot is happy to have a conversation as well:

Rosella Campion

NMLS# 21318
Branch Manager
Loan Depot
(617) 896-1827 

rcampion@loandepot.com
https://www.loandepot.com/rcampion


 
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