I just heard from Deborah Blume, spokeswoman for Wells Fargo Home Mortgage, the preferred lender for Vantage Pointe. As I mentioned in last night’s story, one of the big questions left for the buyers who’ve committed to purchase units in the massive downtown condo project is how they’ll get loans on them.
Here’s what Blume said were the conditions under which Wells Fargo would lend mortgages on the project:
Before any loans can be made in any of Vantage Pointe’s three attached towers, 70 percent of the units in the tower in question must be reserved by buyers with deposits. In addition, 75 percent of the units sold in each tower must be sold to people who are going to live in the units, or use them as a second home.
More from Blume’s statement:
When minimum presale requirements are met, Wells Fargo can begin closing on loans for buyers.
The developers told me about that conditional approval from Fannie Mae last week, but
Brian Stoddard, president and chief operating officer of Pointe of View, said on Friday it is too early to tell if the Fannie Mae conditions will be met before the first buyers’ deadlines next weekend. Stoddard said the individual buyers’ contracts could only be lifted if the buyers can’t close on their units because the construction isn’t finished, not if the buyers can’t get loans.
You might remember the potential mortgage monkey wrench I posted in March when Fannie Mae changed its rules for approving condo buildings earlier this year, and I wondered what the effect of those changing rules would be on Vantage Pointe.
Here was some of Fannie Mae’s rationale for the tightened standards, as reported in The Wall Street Journal in March:
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.
All the mortgage pros I talk to say condos have become quite tricky to finance for at least the last six months. While a buyer might still get a mortgage with just a 5 percent down payment for a detached homes, most banks are looking for at least 10 percent for the buyer of a condo who wants to live in the property. For a second-home buyer or an investor, the thresholds have been raised to 20 to 30 percent down.
And most banks want a list of assurances about buyers and the building they want to live in: that a certain number of the units are lived in by their owners (usually 50 percent), that the developers of new buildings aren’t going to turn around and rent out the units they can’t sell, that the homeowners association isn’t suing the builder for any reason.
I wrote about some of those issues in October.