Fannie Mae will charge higher fees to review condominium projects for financing.
Condos accounted for roughly 9% of the government-sponsored enterprise’s conventional book of business in the first nine months of 2011, according to its financial filings. Since 2009, Fannie allowed lenders to submit a condo project to Fannie for review. Once a project is approved, a lender can send mortgages on individual units to the GSE for funding.
The review is required for any projects in Florida.
Since the review process launched, submissions increased substantially and the projects became more complex, Fannie said in an alert to lenders Tuesday. More research and analysis is needed to determine the risk of the projects, so the GSE increased what it will charge lenders.
Fannie increased the base fee for all voluntary and mandatory reviews to $2,500 from $1,200, plus $30 for each unit in the project. Fees will no longer be waived for mandatory reviews in areas such as Florida.
If a project has more than 20% commercial use, Fannie will charge a new $5,000 one-time fee.
If more units come onto the project after an initial approval, the lender will be charged either $1,000 or $30 per new unit, whichever is greater.
Fannie did extend the term of the initial approval to nine months from six; and the final approval term to 18 months from 12.
The new fees will be assessed for reviews submitted beginning on April 1.
Peter Zalewski, principal for Condo Vultures, which tracks real estate data in Florida, said financing is no longer an issue at least in the South Florida condo market.
“Most buyers, especially the foreign nationals with strong currencies, are acquiring condos in cash to obtain deep discounts,” Zalewski said. “The investors are in turn renting out the units to individuals who are forced to rent due to economic constraints or a lack of financing.”
Those who do have to finance a condo purchase — often a first-time homebuyer — must boost their offer price in order to beat an all-cash offer, which can close in as little as two weeks, Zalewski said.
“The Fannie Mae fees are likely to work toward strengthening the quality of their portfolio but not assisting the qualified buyers who need the financing assistance,” Zalewski said.
