New rules from Fannie Mae are making it harder to get a mortgage for a condominium unit. Effective this past March 1, the mortgage giant will no longer purchase mortgages for condo units in new buildings unless at least 70% of the units are sold or under contract. Previously, Fannie would purchase mortgages as long as at least 51% of the units had been sold.
As a result of the change, a number of people who thought they would have no trouble getting a mortgage suddenly found out otherwise. They might be able to get out of their purchase and sale agreement, assuming they have a mortgage contingency clause.
Fannie says the change is necessary to protect people from buying into buildings that could see a high rate of foreclosures. Developers are allowed to apply for an exemption from the rule, though, and Fannie says it has already made dozens of exceptions.
In another change, Fannie says it will no longer purchase mortgages in condo buildings if 15% of the owners are 30 days late on their condo association dues. (However, this change only applies to initial purchases, not to refinancings.)