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Strategies & Market Trends : The Residential Real Estate Crash Index
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From: Les H4/15/2009 12:15:07 PM
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40 pct or more down required for S Florida condos

Burned by soaring default rates on South Florida condos, banks have become as careful about vetting the buildings where they make loans as they are about the borrowers themselves.

That means buyers, if they are lucky enough to get a mortgage, have to put down 40 percent or more on condo purchases -- unless a project meets regulations set forth by the Federal Housing Administration or Fannie Mae, the government-sponsored corporation that buys or backs mortgages.

A recent change by Fannie Mae has made it especially tough for South Florida projects -- especially newer ones -- to qualify.

Particularly vexing is a new rule requiring that up to 70 percent of a new project's units be pre-sold and that no more than 49 percent be owned by investors.

That eliminates scores of new South Florida projects, especially in the new-construction belt between the Julia Tuttle and Rickenbacker causeways. Many newer condo units in that area were snapped up by speculators who never intended to live in them but saw them as investments to flip for quick profits.

Peter Zalewski, principal of Condo Vultures, a Bal Harbour real-estate services firm, estimates that by the time all new units in the condo belt are delivered, as many as two of every three sales will have been made to investors.

miamiherald.com
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