The Morning Report
San Diego news and info
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The Wall Street Journal had a story this week about new rules from Fannie Mae, the government-backed giant mortgage company, that change the company’s policies on lending mortgages on condo buildings.
The rules could make it more difficult for condo developers to sell their units. From the WSJ:
The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%. In addition, the company won’t back loans for sales in buildings where 15% of current owners are delinquent on association fees or where more than 10% of units are owned by a single-entity.
The story made me wonder about potential impacts to Pointe of View, the Calgary-based company currently building Vantage Pointe, downtown San Diego’s biggest condo tower.
One of the biggest questions buyers have in an era of harder-to-get mortgages is how they’ll finance their units. About 80 buyers attended a recent financing briefing with the building’s preferred lender, Wells Fargo. The bank is pursuing approval from Fannie Mae, a giant government-controlled buyer of mortgages, in order to make conventional mortgages available to buyers. To obtain that approval, the developer would have to prove to Fannie Mae that at least 25 percent of the units have been presold.
I’ve put in a call to Wells Fargo to see if Vantage Pointe will be affected by the new rules. When I hear back, I’ll let you know.
Here’s Fannie’s justification for the new rules:
Fannie says the new rules protect borrowers from buying units in buildings that have a high risk of failure while also preventing the companies — and taxpayers, given that Fannie and Freddie are operating under government conservatorship — from throwing good money into troubled developments. Developers can petition Fannie for an exemption from the rule, and so far more than 50 exceptions have been made.