On December 16, 2008 Fannie Mae issued new mortgage underwriting guidelines for condominiums projects. The new rules reflect the higher standards demanded by the market following the bursting of the housing bubble. Most of the new criteria apply to new condominium projects; however, Fannie Mae has refined a provision related to condominium association delinquencies which will be applied to all new and existing condominium developments. The guidelines provide that underwriting decisions will take into account the delinquency rate of an association and have set a bench mark that associations should have no more that 15% of units no more than 30 days delinquent. This requirement was widely reported in the press as being a make or break threshold for mortgage underwriting determinations. The reality is that it will be one of a variety of factors in the underwriting decision process. More information on this issue can be found here.
2009 looks to be an important year for housing issues at the federal level. Decisions on how to stimulate the economy and to restore confidence in the mortgage markets and banking system will have a follow on impact on community associations. CAI will be engaged with key decisions makers in DC to ensure that the impact of these decisions on community associations is heard and considered.
