Condo Blog – A Non-Corporate Blog From CondoDomain HQ

Effective March 1, 2009, Fannie Mae is implementing condo guideline changes “in light of the current condo market and the need to mitigate risk on condo loans”. Some of these changes may affect a buyer’s ability to obtain conventional condo loans for new and established condos.

A condo project is “established” if 90% of the units have been sold, is complete and the HOA has been turned over to the owners. A condo project is “new” if less than 90% have been sold, is not completed, is subject to phasing or if the HOA has not been turned over to unit owners.

Overview of Fannie Mae condo guideline changes:

• For new construction and converted  new condo developments, 70% of the units must be pre-sold (closed or under contract). This is being increased from 51%.
• No more than 15% of a condo project units can be more than 30 days delinquent on HOA dues. This is an existing guideline that is now being applied to new condo projects. The calculation was also changed from being 15% of HOA fee payments to 15% of total units.
• Fidelity insurance will be required for condos with 20 or more units, ensuring that homeowner association funds are protected. Presently, this requirement applies to new projects and is now being extended to include established condos.
• A requirement that borrowers must now obtain a condo-owners insurance policy unless the master policy provides interior unit coverage; coverage may not be less than 20% of the assessed value. A condo-owners policy, known as an HO-6 policy, covers personal property, personal liability, and the physical unit from the studs and in. Many policies also include special assessment coverage or the option to include a special assessment coverage rider.
• No more than 10% of a project can be owned by a single entity.
• No more than 20% of a project can consist of non-residential space.
• The homeowners association must have at least 10% of its budgeted income designated for replacement reserves and adequate funds budgeted for the insurance deductible.

Any questions regarding the Fannie Mae new condo guidelines please visit our lending department at www.CondoLoanCenter.com or contact us at info@CondoLoanCenter.com

Money is already tight at The Wilshire Condominium, and new lending rules threaten to make life even more difficult for it and other condos around the country.

Arthur Barr, a board member of the Wilshire homeowners association, estimates 30 percent of the owners in the 378-unit building in North Miami Beach are behind on their fees. That makes it difficult to pay for things like elevator repairs and gardening.

Now, Fannie Mae — the biggest player in the mortgage market — wants to ensure that if it’s backing a loan for a condominium, the building is in good shape. If the building is brand new, Fannie Mae wants to be certain there are enough owners to pay for maintenance and preserve the value of the property.

Sound simple?

Nothing is simple in Washington these days.

The new rules were designed to protect buyers and lenders, but they may make it harder for condo owners to sell. That could hobble the recovery of the condo market.

And in the end, critics say, the rules will mean cash-strapped associations like the Wilshire’s won’t be able to maintain the very buildings that Fannie Mae wants to preserve.

“I guess things can get much worse before they’re going to get better,” Barr said.

Under the new regulations, Fannie Mae will reject any mortgage for a condo buyer if more than 15 percent of the other owners are delinquent on their association fees. What’s more, Fannie Mae will only guarantee mortgages in new or newly converted condo developments if 70 percent of the units are sold or under contract.

Critics say the rules, which went into effect this month, could force some new developments into bankruptcy because the 70-percent requirement will be hard to reach if buyers can’t get a loan.

There’s already more than a year’s supply of condos for sale on the market. And about 93,000 new units are expected to be completed this year, a 28 percent jump from 2008, according to Reis Inc., a real estate firm based in New York.

“By setting the higher threshold they’ve reduced their risk of making these loans, but they’ve also virtually killed the potential for many projects to be successful,” said developer Jeff Spear, owner of The Spear Group in Fort Lauderdale, Fla. “It’s going to make it extremely difficult for this inventory to get absorbed.”

The riskiest market in the country is Miami, which saw a building boom beginning in 2002. Since than, about 38,000 condo units have been built or are under construction in Miami-Dade County, with more than 22,000 of those concentrated in or near Miami, said Jack McCabe, president of McCabe Research & Consulting.

“It’s not surprising that developers are talking about a death spiral,” McCabe said. “There are so many units that are unsold and they are unable to pay off construction loans.”

He estimated that as much as 40 percent of the 16,000 completed units in Miami remain unoccupied. More than a half-dozen condo projects in the Miami area are stalled because sales have slowed to a crawl and the credit needed to build them has disappeared, said Jennifer Drake, real estate attorney with Becker & Poliakoff.

Developers in other hot markets, such as Las Vegas, also rushed to build condos and condo-hotels but had developments stalled or canceled. Las Vegas real estate agent Sue Naumann estimated that of about 100 planned high-rise condo projects, only about 20 were completed.

The excess condo development and subsequent financial problems were fueled in part by speculators like Izad Djahanshahi, who invested in 41 units during the real estate frenzy that gripped Miami from 2002 to 2005. Now, he has eight condos in foreclosure. He has filed for bankruptcy protection from creditors and estimates he owes about $500,000 in back mortgage payments.

“We just bought and sold and bought and sold,” said Djahanshahi (jah-han-SHAH-hee). “We kept the money in the company and we invested more and more. Suddenly, everything stopped.”

As investors like Djahanshahi failed to pay mortgages, units were foreclosed upon and have remained empty, leading many condo associations to cut back on services like security, valet parking and landscaping because they can’t collect enough fees.

Florida condominium ombudsman Bill Raphan could not offer specific numbers, but estimated that a “good percentage” of condominium associations have delinquencies more than 15 percent.

Attorney Donna Berger represents 1,000 community associations in Florida. She said delinquencies were up around 5 percent among the groups the represents, and reached 90 percent in certain “mostly investor-owned communities.”

“I understand (Fannie’s) need to insulate their risk, but I think further tightening the stranglehold on condo owners is not the answer,” Berger said.

Fannie Mae spokeswoman Amy Bonitatibus defended the company’s new guidelines, saying it wants to reduce risk for lenders and protect buyers from condo fee increases or special assessments, company spokeswoman said.

But the bottom line is condo sales will likely take another hit.

The rules are discouraging buyers like Jim Lyon, who wants to buy a new condo in Miami for about $250,000.

“I’m leery of making the commitment now to a condo,” said Lyon, 55. “The restrictions are that much tighter now.”

As buyers get shut out condo prices may fall further. Fewer buyers also could mean higher association fees for the rest of the owners who may have to shell out more money to cover vacant or delinquent owners, said Robert White, managing director of KW Property Management & Consulting in Coral Gables, Fla.

“It’s going to lock everybody in,” White said, “including the people who are delinquent.”

(By ADRIAN SAINZ via – Associated Press)

Despite an increase in existing-home sales in February, sales activity remains relatively soft, a consequence of additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, according to the National Association of Realtors (NAR).

Existing-home sales—including single-family, townhomes, condominiums and co-ops – rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January with a year-over-year decrease of 4.6 percent

Sales of condominium and co-op increased as well, to a seasonally adjusted annual rate of 490,000 units in February from 440,000 units in January, which is still 13.1 percent lower than the 564,000-unit pace a year ago. The median existing condo price was $172,200 in February, which is 18.7 percent lower than February last year.

“Prices stabilized and there was a modest recovery of volume,” Jed Smith, managing director of quantitative research, tells MHN. “But we haven’t had a chance to see the effects of the administration’s new programs, and this will take about five to six months. At that point, we forecast, the bottom will be reached. Condos and co-ops tend to lag behind the single-family market, and seem to be hit harder so their recovery might take a little longer.”

According to Smith, the single-family housing market will begin its recovery by the third quarter of 2009 and condos and co-ops will follow shortly after. He says the tax credit and other stimulus measures will contribute a great deal towards the recovery.

Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry-level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he says. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”  Continued…

(via – Multi-Housing News)

Do some banks have too much money? Does this problem exist in the midst of a banking center meltdown?  What bank in their right mind would refuse monies in this marketplace?

The answer: M&T Bank

A friend of mine called me last evening and asked me about pre-payments on his mortgage and if it was common to have them.  My first response was: “it is not so common, but if you pay your mortgage off early their could be some minor cost associated with that called a pre-payment penalty.”  I instructed him to check his loan documents.

After further talking on the phone I figured out that my friend was talking about making “Extra Principle Payments” on his monthly mortgage statement.  He had told me that he was trying to pay down his mortgage over time – I noted to him that was more than common – it probably is most appreciated especially in these economic times.

Well – he went on to tell me that he is not allowed. That he had got this letter (attached) and he had spent the past 2 days on with customer service and management to be allowed to make extra payments to his mortgage.  He was bullshit – and I had his back!

M&T noted that the loan which was originated by Bayview Financial was just another “problem loan” that they had purchased off of them and that this was a regular thing and that they were sorry for the inconvenience and that they just service the loan.

NUTS!!!!

The Outcome: After two days, M&T has favorably awarded my friend the “RIGHT TO PAY HIS MORTGAGE DOWN” without a penalty.

So today, my friend, who is a very successful, highly educated and demanding human being convinced this bank to do the right thing, but what is happening out there for the rest of the American public?  Someone not so savvy or smart?  How many more people are getting screwed by the mortgage banking system?

I am disgusted…

** Full Disclosure: I have never delt wtih M&T Bank or Bayview Financial and therefore, I have no personal opinion on the subject other than B.S. they put my friend through for in my opinion a dumb reason.  Nobody and I mean nobody holds a mortgage for an entire 30 year term – the pre-payment of principle should not be an issue with any mortgage in this country!

RATES HAVE REACHED AN ALL TIME LOW

30 YEAR FIXED BELOW 5.00%

SPREAD THE WORD – SHARE THE WEALTH!!!!

The Fed announced a plan to buy an additional $750 billion in agency MBS bringing the planned 2009 total to $1.25 trillion.

In addition, the Fed will buy 300 billion in long-term Treasury securities over the next 6 months…

Please let me know if I can help you or any of your friends or family.

You can place a quick rate inquiry on our website below.

Visit our website at www.CondoLoanCenter.com
Or shoot me a quick email at info@CondoLoanCenter.com

*** Please note we are expecting a ton of volume with rates this low.  ***
*** We do promise to get back to you the same day ***

Thank you,
Christina Longo
Mortgage Consultant
CondoLoanCenter / Prospect Mortgage

Hot off the press today, Inman news, announced that a bill is trying to be passed to make it “LEGAL” to allow real estate agents to provide a rebate or refund to buyers of real estate in the state.

Currently, commission rebates are allowed in 40 of the 50 U.S. states thanks to the Department of Justice who has been fighting on behalf of the general public in a massive case against real estate agents who in part have collaborated over many year an “anti-competitive” environment surround real estate commissions.

As of today – 10 U.S. states ban the use of real estate commission rebates – including New Jersey.  Much more can be read on this topic here on our blog or on the Department of Justice website.

New Jersey is a market we have long been waiting to grow into as the “Gold Coast” including hot condominium markets – Hoboken, NJ and Jersey City, NJ.

We are currently planning on opening this market in the very near future and hope that the release of the real estate commission ban in New Jersey will allow us to prosper.

New Jersey’s General Assembly on Monday voted 46-25 to pass a measure that allows real estate brokers in the state to give rebates to homebuyers — counterpart legislation has not yet been passed by the state Senate.

The New Jersey Association of Realtors, a statewide real estate trade group, has earlier opposed legislation (see Inman News article) that sought to lift the state’s rebate ban.

A spokesperson for the New Jersey Association of Realtors could not be reached for comment after hours on Monday.

The U.S. Department of Justice has taken action to reverse statewide real estate rebate restrictions, and lists New Jersey at  an Antitrust Division Web site among the states that prohibit real estate brokers from offering rebates to consumers. “New Jersey consumers are unable to benefit from rebates that consumers in other states may receive,” the Competition and Real Estate” site states.

Derek Eisenberg, a flat-fee broker who has operations in New Jersey, said, “I could not be happier about the (possible) repeal. It’s a huge boon to consumers that will indirectly let buyers negotiate commissions on the purchase the same way sellers can negotiate at time of listing.

For more information on Real Estate Rebates search our blog for real estate rebates or real estate refunds.

Call us crazy, call us idiots, but yes, we are continuing to grow, let alone in this economy but in the real estate vertical!!!

The entrepreneurial passion and young energy we have in our company is truly amazing and so far “recession-proof”.   So far this year we have expanded our web-based real estate brokerage from one city (Boston) to EIGHTEEN.  Thank you CondoDomain team – lets keep-a-rockin!

Our soft launch today includes our 6 newest cities:

Los Angeles, CA
Austin, TX
Las Vegas, NV
Orlando, FL
Chicago, IL
Seattle, WA

Why are we growing so fast?

First off, we are seeing the demand for our product and service.   We are finally getting close to putting analytical statements together regarding consumers wants and needs in the “innovative real estate brokerage space” (we don’t use the word discount, if that is what you were thinking…).  Consumers are far more savvy, more educated and finally know there are options out there, HOWEVER, most of these options do not exist within major urban metros.    Just like Redfin and Zip Realty has given choice to our suburban dwellers, we hope that CondoDomain can be that option for urban city dwellers.

Also, I believe this is a great time to grow.  A tad risky, but kinda fun .  Hey, we are busy, but we are not slammed,  why not use our time to grow this thing with the extra time we have on our hands?  Good idea right?  That’s exactly what we are doing but we are not doing it alone.

Our broker partners in each city are truly amazing.    We know we partnered with truly great people, but we also believe we have partnered with some of the very best condominium real estate brokers.  They understand the market, they understand the industry, the product, but most of all, they understand our clients.

What else is new?
ReatlyTrac is!  We officially formed our partnership with RealtyTrac to pump in Foreclosure listings to our website on a national basis.  We understand its a big part of the market and we have jumped in to help this horrible problem.  So if you are looking to buy a foreclosure, let us know, all of our broker partners are working with buyers right now acquring foreclosures.

Last but not least – new website design to come by months end.  We put up a teaser for you today so you can get a feel for whats to come – check out our new global home page.

Longwood Towers Condo Auction is now showing.  The time has come and it is now open to the public to start showing the condo units.  You can now preview every Longwood Tower condo unit that will be auctioned off starting tomorrow!

Because Accelerated Marketing Partners allows co-broker participation, you CAN have a buyers agent represent you and work with you at the Longwood Towers Auction event.

What does this mean for you?

Well, this means you will not only get a steal on your Longwood unit, but you can get EXTRA CASH BACK via the CondoDomain commission refund buyers agent model.

Using a buyers agent to help you with your purchase is always FREE as the seller always pays the buyers agent co-broke commission, usually 2.5% of the purchase price.

If you are not familiar with our business model, CondoDomain buyers agents work with all of our clients for a low flat fee and refunds the remainder back to our client (the buyer).  On the average $500,000 purchase a buyer working with CondoDomain will get back $7,500 in CASH!!!

CondoDomain Agents are now showing buyers these Longwood Auction units so if you plan on attending or are interested in buying one of these units make sure to contact us so we can bring you over to the condo development.

If you are in a rush and you need to go over to Longwood right away, make sure you sign in and let the sellers representative know that YOU ARE working with CondoDomain as your buyers agent!

More on the Longwood Towers Condo Auction:
Previews start tomorrow (3/11) and the condo auction will be held on Saturday April 4th at the Westin Copley in the Back Bay.

The Auction Information Center, as well as the auction homes, are open daily from 11 AM – 6 PM, Monday through Saturday, and 12-6pm on Sundays.  Please visit us at 20 Chapel Street, Brookline, MA 02446.  Call us so we can schedule you an appointment at 617-314-7704.

For more information and to look at floorplans, you can login to the Longwood Auction Condo website (BE SURE TO CHECK OFF “REAL ESTATE BROKER” when you register to insure that you can work with us.)

Check out the minimum pricing for the auction units below:  (click to enlarge)

Condo Marketing 2.0 – from the west coast to the east coast we have wrote about it before, but it is the mid-west that takes action and we are loving it!

Facebook, Flickr, Twitter, AddThis & Myspace – - – Boom – - – now that is Condo Marketing 2.0

The Rockport Square website (also featured on our new Cleveland website) is the first new condo develompent I have seen EVER to make a true attempt to implement web 2.0 marketing tools into its website.  If you visit the Rockport Square website you will notice nice, big, fat icons to “socially partner” with this new condo community.  From Facebook and Flickr to Twitter and Myspace, it seems to be that these Cleveland condo developers got their “A” game on!

So has social media gone main stream in the real estate vertical yet?

We applaud Rockport Square, have engaged them in their social marketing tactics, and plan to follow this cutting-edge development team in hopes for their great successes throughout sellout.

We are also pleased to announce CondoDomain is now open in the Cleveland marketplace so if you are looking to by a Cleveland condo, let us know, we will save you thousands!!!

As always – if you are looking to buy and you need a mortgage – make sure to get a FREE RATE QUOTE from CondoLoanCenter!

Anyone know of any other “uber-innovative” “social media’ist” new developement 2.0′ers?

“The lawsuit brought by Kevin Ahearn and Wayne Lopez against CondoDomain LLC and Anthony Longo Jr. has been resolved in a manner that is satisfactory to all parties;”

We are pleased to announce that last week the lawsuit was resolved and that we are fully back in high spirits operating our web-based buyers brokerage. In celebration of this suit being over, we plan to offer a new and extremely exciting product.   Sellers — are you ready?

More to come soon…

*** PRESS INQUIRY’S:  Please note we cannot and will not be taking any questions regarding the outcome of the suit.  We have put it all behind us now and look forward to moving forward in a positive and productive direction.  Thank you for your understanding.