WASHINGTON (AP) — Fannie Mae is seeking to prop up Florida’s ravaged real estate market by reviewing hundreds of condo projects in the state that currently don’t qualify for its loans.
The mortgage finance company said Thursday that buildings deemed stable after the review will be given a special approval lasting up to 18 months.
If they are approved, lenders will be allowed to offer mortgages to homebuyers and sell those loans to Fannie Mae, which pools them into bonds and sells them to investors.
The reviews will look at the buildings’ occupancy, homeownership association dues, financial stability and physical condition.
Under nationwide regulations enacted in March, Fannie Mae has been rejecting any mortgage for a condo buyer if more than 15 percent of a development’s other owners are delinquent on their association fees. Fannie Mae has been willing to make exceptions to that rule, but now it is actively seeking out applications for exceptions.
The initiative is “is geared toward providing maximum support for Florida’s distressed condo market,” Karen Pallotta, executive vice president of the company’s single family mortgage business.
The rules for new buildings still are tight. Fannie Mae will only guarantee mortgages in new or newly converted condo developments if 70 percent of the units are sold or under contract.
Fannie Mae and sibling company Freddie Mac provide vital cash to the mortgage industry by purchasing home loans from lenders and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages.
The two companies, facing mounting losses from mortgage defaults, were taken over by the government in September 2008 under the authority of a law Congress passed in summer of 2008.
So far the government has provided $60 billion to Fannie Mae and $51 billion to Freddie Mac, and the Treasury Department last month promised unlimited aid over the next three years.