Fannie/Freddie change appraisal standards

This is just the begining...there's many different standards that will be coming.

There's a post over on Brownstoner.com's forum regarding co-ops with four or fewer units. There aren't too many of these in Manhattan, but there are quite a few in "prime" Brooklyn areas.

Apparently Fannie and Freddie will no longer purchase mortgages for smaller buildings and because of this banks don't want to write these mortgages.

So now prospective purchasers need to be 100% cash. Not good for current owners.

bardamu,
could you give the link? I can't find that post

found it:

http://www.brownstoner.com/forum/archives/2009/04/mortgage_for_a.php

Scary. Financing, the oil of the economy, seems to be grinding to a halt. Lenders are scared & have little faith in the economy, let alone the RE markets. Seems that unless one qualifies for a fed program, lending is scarce.

The basic problem as I see it is that a lot of the new regulations are based on the framework of the broader American housing market and don't translate very well to the New York market. What will work well in Miami and Las Vegas won't necessarily work well here, but in the interest of having a uniform nationwide set of regulations, we're going to get stiffed.

True, but seems like few NY lenders are interested in pursuing this market in view of the new regs.

Is this only for coops, as there are thousands of small condo buildings throughout the states with 4 or less units. I find it hard to believe unless its coops only

bardamu, the scariest market is the one that has fallen the least, yet had some of the greatest increase in prices.

i'm not sure why the regs wouldn't apply to NYC. if i were a lender i'd be scared shitless giving a $3,000,000 mortgage to someone buying at 86th and Lex.

bugelrex, the appraisal issues in general or the restrictions against lending in buildings with few units?

There will be a mortgage market for these coops(less than 4 units) like there will be a market for the under 70% sold buildings. There are always lenders for the 'unique' property or the 'less than optimal' buyer. Generally these will be portfolio lenders, lenders who lend their own money and who don't plan on selling the loan. These banks will require premium premium credit, and significant down payment, ie 30% or more. And they will make money on these loans. I purchased a condo out west in a ski condo early this year that I had signed the papers for three years ago. The price per sq ft we got is lower than the number that it is selling at these days, but still a signif number. I didn't know, but I sure did find out late last year, that a condo that can rent out for daily rentals(even if you do not plan on renting out at all) is considered a hotel condo. Hotel condos are not financed like a second home condo. It is a whole different ball of wax. It is financed with higher terms(APR) and with a higher down payment, to a lender that does not sell the loan. They were very happy to loan me the money ON THEIR TERMS, and there are very few lenders that are doing hotel condos now because they have been burned in other markets like south Florida and Vegas. There was no ability to comparison shop. So don't be fooled. There will always be lenders willing to make loans. Lets we forget, the Countrywides out there. They initially made their money, and lots of it, making loans to the people with bad credit or in bad neighborhoods. They had no competition, so they could charge whatever they wanted.

Skippy,

You're right, but as you said, the terms are higher & there's no comparison shopping. This limits ability to buy/sell.