new Fannie Mae Rules

James bond:"Do you expect me to talk?"

Goldfinger: "No Mr Bond I expect you to die"

Does anyone know how to get around this new Fannie Mae rule,

You are pretty much hosed.
Options are pay cash or use a nonn-standard lender and probably pay a lot more in borrowing costs.

Borrow from a regional bank that actually wants to hold onto the loan instead of flip it to Fannie Mae. Astoria Savings and Loan comes to mind, unless this is a jumbo loan, and then the Fannie thing doesn't matter anyway.

More to the point - what secret knowledge do you have about your planned purchase that outweighs the fact that 99% of the banks in America consider it too risky a venture to even consider?

I would think that most of the new developments would have made arrangements with a "preferred lender" to accomodate such sales.

No?

Yes, rely on the old "preferred lender". This is just a new form of brokerbabble. That would explain why buildings like the Rushmore have 14 units closed as of today's date, after how many years? There is a condo conversion near me that doesn't fit fannie mae guidelines that has had one closing since last Fall--an all cash deal that took over five months to close. Eventually all cash will mean bigger price discounts when buyers wise up.

OUR MONEY SOURCE FOR CONDO PURCHASES JUST DRIED UP BECAUSE FANNIE MAE PUT THIS RULE IN PLACE. It is an excellent rule prospectively protecting FNMae's newly acquired assets (new loans) BUT it just put a gun on its head and pulled the trigger again. HELLO... MORE FORECLOSURES, how are banks going to get rid of these non performing assets that FNMae guaranteed..... IT IS SUICIDE for FNMAE.

How the hell does this help the value on Condos NOW! It shut the money source. I bet that only a handful of buildings in Manhattan will qualify. Some conversions are designed to only sell around 50% of its units because there are still rent stabilized tenants in the building that you cant evict until their rent status changes.

Now I am convinced that you'd CONTINUE to see a steep drop in prices as soon as deals start falling through because of the failure of buildings to qualify for financing.

This rule is a an on-going thing, meaning, a building may qualify now but it may not qualify tomorrow depending on its occupancy performance. Any foreclosure or delinquency may affect the entire building, ie, your ability to dispose your investment. That is too much of a gamble for homeowners. who would want to own condos given this rule?

Its just a matter of time when the market becomes well informed of this new rule and you will start seeing the demand for Condos dry up...

Those going into contract should really examine their Financing contingencies or you'll find yourself in court trying to recover your hard earned/saved/borrowed down payment.

A lot of prospective buyers should stay in the sidelines and watch this market collapse because of this new Fannie Mae Rule... ITS DOOMS DAY for Condos, thanks to FANNIE MAE.

FNMae needs to amend this rule, because if not, they are going to see more foreclosures...

Apparently there's another Fannie Mae rule that states that condos with 25% or more of building space used for commercial purposes do not qualify for financing or refinancing. At least one bank (Wells Fargo) is applying Fannie Mae rules to jumbo loans too, even though Fannie Mae doesn't buy jumbos.

Come on guys, stop blaming FNMAE! I didn't grow up in the US so i don't know what the rules were before but i suspect it has just been about 10 years of time since the lending standards were made very easy to anybody to get a mortgage. And look where it lead us!
How did your parents or grand parents do during the XXth century to buy their house?
The market needs to be regulated again, there's no questions about it. A 300% inflation in NYC in 10 years doesn't seem a bit odd to any of you ?

A 300% inflation over RE prices that is.

Yes, fannie only guarantees conforming loans but bank are complying with fannie rules because when the secondary market eventually comes back they will likely follow the rules made by the big boys. Investors see fannie rules and see less risk for loans that followed their guidelines. Buildings are getting approved at 51% still but not in all cases. Yes, no single entity can own more than 10% but fannie is allowing some exceptions. Commerical space can not be more than 20% of the building but also Ive see exceptions up to 30% commercial. Its very, very tough out there and certainly some relief on condo guidelines will help but not sure thats going to happen soon. Thats why there's been lots of activity in outer borough condos applying for FHA approval. We're back to how condo guidelines were in the past. Financing contingencies are more important than ever and its importat for developers now to have banks approving their projects in advance. And many developments have started to do that already. It'll be interesting to see how this all plays out. sunny.hong@bankofamerica.com

The Fannie rules are not new, but a return to the old rules. These standards were in place way back...

http://online.wsj.com/article/SB124580784452945093.html

Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to "roll the dice" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity -- with your money. He and New York Representative Anthony Weiner have sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers.

You read that right. After two years of telling us how lax lending standards drove up the market and led to loans that should never have been made, Mr. Frank wants Fannie and Freddie to take more risk in condo developments with high percentages of unsold units, high delinquency rates or high concentrations of ownership within the development.

Fannie and Freddie have restricted loans to condo buyers in these situations because they represent a red flag that the developments -- many of which were planned and built at the height of the housing bubble -- may face financial trouble down the road. But never mind all that. Messrs. Frank and Weiner think, in all their wisdom and years of experience underwriting mortgages, that the new rules "may be too onerous."

I hope Barney Frank is reading...

And when Barney Frank takes no responsibility for the housing crisis...
http://commdocs.house.gov/committees/bank/hba92628.000/hba92628_0f.htm

Mr. GOULD. Oh, I am sorry, 1934. I am sorry, I thought you said 1933. The 1934 Act is as soon as we can. We cannot do that until our financials are current. And that will probably, as Director Falcon said this morning on the first panel, that will probably take into the middle of next year. As soon as our financials are current, we will do so.
The CHAIRMAN. The gentleman's time has expired.
Gentleman from Massachusetts.
Mr. FRANK. Let me ask Mr. Gould and Mr. Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?
Mr. Raines?
Mr. RAINES. No, sir.
Mr. FRANK. Mr. Gould?
Mr. GOULD. No, sir.
Mr. FRANK. And let me ask now the gentleman from the Federal Home Loan Bank, do you believe that the Federal Home Loan Bank System has been substantially under-regulated?
Mr. HEHMAN. No, sir.
Mr. FRANK. Mr. Schultz?
Mr. SCHULTZ. No, sir.
Mr. FRANK. Okay. Then I am not entirely sure why we are here, but we killed the afternoon anyway, so we might as well go forward.
I must say, I am inclined to agree with that. I don't see any financial crisis. You can always make things better, but I do think we should dispel the notion that we are here because there is something rotten that has gone on.
And I am not one who has been impressed with the history of results improved by reorganizing boxes, so I don't know whether OFHEO goes to Treasury or not, whether it makes a big deal, I am not going to fight it.

Mr. FRANK. Well, I agree. I think my colleague may be asking you whether you think the regulator here, in fact, should more resemble the OTS and the OCC than some of the proposed statutes do.
But I would say this, yes, there is that same tension. But it is not the mission of either the OTS or the OCC to promote low-income housing. And that's the difference.
I don't want to treat Fannie Mae and Freddie Mac the same as I treat a regular bank. If I wanted them to be just like a regular bank, then we wouldn't need a Fannie Mae and a Freddie Mac. We could have a regular bank.
The theory is that we have these separate government-sponsored enterprises that do have some statutory advantages in return for which they focus on housing, and, specifically, we give them goals. We have the Community Reinvestment Act. Maybe if I filed a bill that gave every bank the same kind of low-income housing goals as Fannie and Freddie and some ability to—maybe I could get it passed. I don't think so.

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And they are very different. OCC and OTS have a safety and soundness mandate entirely, with a little bit of social consciousness with the CRA. But the CRA basically says, ''Do not suck too much money out of the community and do not put any back in.''
It should be qualitatively different than the mandates we have given to Fannie and Freddie.
So I guess that may sum up to me why some of us have some differences on this. I do not want Fannie and Freddie to be just another bank. If they were not going to do more than another bank would because they have so many advantages, then we do not need them.
And so therefore, I do think I do not want the same kind of focus on safety and soundness that we have in OCC and OTS. I want to roll the dice a little bit more in this situation towards subsidized housing.
My time has expired, Mr. Chairman.

AND BARNEY GETTING DEFENSIVE...
http://www.youtube.com/watch?v=wcLB6arGFDc

O.K., I agree that getting back to "old rules" probably makes some sense.

But does this make sense? ARM provided in Fall 2008 to condo owner, adjusts Fall 2013. Bank that gave ARM refuses to re-fi to a fixed rate in early 2009, using "new rules" (exceeding max. allowable commercial space) as reason. So, condo owner still has "adjustment risk" and bank (or investor they sold it to) still has condo owner's riskier ARM? So, I guess the point is that re-financing should be grandfathered in some way from the new "old" rules.

But does this make sense? ARM provided in Fall 2008 to condo owner, adjusts Fall 2013.

By taking out the 5/25 loan back n 08 borrower was "rolling the dice" on rates, and ability to qualify. The prudent thing would've been to go 30 year. The traditional argument for the 5/25 was always that the borrower did not intend to occupy the space past the reset.

The argument that the bank some how has an obligation to refinance the loan seems to indicate a sense of entitlement

Trying not to make this personal. Logically, from a risk-management perspective, it does not make sense for a bank that holds an ARM to refuse to convert it to a fixed-rate mortgage (especially if the fixed rate is lower than the existing ARM rate). By denying owners with ARMs the ability to convert to a fixed rate, the banks are exacerbating the current financial crisis.

the problem as you probably know is that the holder vs servicer/originator of the mortgage are different parties.. Ignoring that I do agree that the holder should weigh the cost of foreclosure vs extending the loan. That said no explicit promise existed regarding extension of obligation.

My building is not a new project. But the building has now become unwarrantable due to the fact that the sponsor still owns more than 10% of the units. Now I have to assume my condo has gone down in value.

the fact that the sponsor still owns more than 10% of the units.

meant to protect the country against lending to florida/vegas condos that aren't viable.
Surprised the sponsor has not sold that many units. This could not have been by choice. Check with the managing agent, they may know of lenders who are taking that into consideration.

"Trying not to make this personal. Logically, from a risk-management perspective, it does not make sense for a bank that holds an ARM to refuse to convert it to a fixed-rate mortgage (especially if the fixed rate is lower than the existing ARM rate). By denying owners with ARMs the ability to convert to a fixed rate, the banks are exacerbating the current financial crisis."

From a risk management point of view, either I'm totally misreading you or you are totally wrong. Unless you are 100% sure rates are going to go down long term, because I think the opposite.

The only way to get financing for the condo's that are not approved by Fannie/Freddie is going to the small banks that are holding their loans (portfolio) and not selling them to Fannie Mae.

The rate and the terms are not that much different than regular loans especially if this is a "jumbo" purchase.

Or you could just buy a co-op.

Such a complete load of horse shit these rules are. I was denied financing for a refi because my building did not put 10% in reserves every year. Despite, building meeting every single other idiotic requirement and me having credit in the 800's with LTV of 50. Unbelievable. Thankfully, another lender was willing to take on the loan at 4.375% instead of the 4% that drew me in. Still better than the 6% of my original loan. These idiotic rules are costing us homeowners money. The gov't under Obummer won't be satisfied until everyone is under the yoke of more taxes and total gov't ownership of land after no one can afford to buy land. It's going back to the Fiefdom system.

You do realize, don't you, that the only effect of the Fannie Mae rules is to limit who is eligible for larger government SUBSIDIES in the form of a free government insurance policy against default. Slightly less subsidized loans remain freely available from banks that are willing to actually take the risk they are paid to take without taxpayer handouts. Of course, even those loans still benefit from taxpayer subsidies, such as the income tax deduction, FDIC insurance and the other backstops for the banking system.

To be sure, the rest of us are giving you less free money than formerly, but it seems a bit bad form to say that your reduced access to welfare payments is "costing you money" especially since, apparently, you aren't willing to pay the taxes that fund this giveaway.

If you want to avoid the yoke of taxes, you are, of course, free to live in a country without taxes, such as Somalia.

>If you want to avoid the yoke of taxes, you are, of course, free to live in a country without taxes, such as Somalia.

Any other examples?

So basically you, jwl262, are saying that you want a free lunch, a hand out form the government. lazy piece of shit!

JWL2672, obailout works for the fed and those dark forces. he would bailout the flippers and deadbeats, but give a hard time to the sincere buyers

>JWL2672, obailout works for the fed and those dark forces

This is about the Rockefellers again?

Brooks2,

Come again??? I'm the one who has an 800 credit score and effing pay 200k in taxes a year. What do you pay? The lazy piece of shits are people like you who defaulted on your rent or your loan to the government.

Government is giving ME free money? How is that? Banks pay a premium (between 5 and 43 basis points)for FDIC insurance you fucking idiot.

financeguy,

see response above to Brooks

FDIC insurance is not a "handout" from taxpayers, fool. Banks pay for it.

As an obvious Democrat, I'm surprised that you're supporting the big banks that now have people locked in paying 6.5% interest instead of refinancing and paying 4%. That extra money is going to filling the big banks' pockets.

Do you really believe the FDIC is not backed by the taxpayers? The banks do pay for the FDIC insurance, but if the FDIC is in danger of being insolvent and increased premiums or assessments were not feasible at the time, the federal government would have to step in. An example of that was the S&L and bank crisis of the late 1980s/early 1990s which cost taxpayers more than $100 billion because the government had to step in.

In any case, you are complaining about the Fannie Mae rules right? Are you suggesting that Fannie Mae is not subsidized by the taxpayers? Maybe you rather pay 250K instead of 200K in taxes to bailout Fannie Mae without the new rules so that you can save 0.375% on your mortgage?

What does the FDIC have to do with any of this? financeguy's analysis is basically on point--the only reason these rules matter is because Fannie and Freddie have implied "insurance" backed by the government. The fact that you're not eligible for a loan they're willing to buy just means your insurance rate won't be subsidized by the government, so it is indeed pretty comical to be complaining about the lack of a government subsidy in the same screed that you make it clear you don't want to pay any more taxes.

Hey JWL2672 u dope
1. I am a libertarian
2. My fico is 812
3. I paid more in tax than you.

4. "What does the FDIC have to do with any of this?". You asked the FDIC for a loan? How did a dope like you earn enough to pay 200k in taxes?

I will quote Sunday, "In any case, you are complaining about the Fannie Mae rules right? Are you suggesting that Fannie Mae is not subsidized by the taxpayers? Maybe you rather pay 250K instead of 200K in taxes to bailout Fannie Mae without the new rules so that you can save 0.375% on your mortgage"

Who is correct.

JWL2672 must be a politician, and they are always right because they control everything

only 200k in taxes?--you loser!!

The $200K is split between Brooks and caonima.