On March 1 of this year, brand new guidelines about the types of mortgages the government can purchase went into impact. There are also rising rates of default on condominium fees. These two factors are making condominium possession very challenging for many homeowners. Those seeking to purchase new homes are also re-considering condos. Article source – Condominium ownership becoming more difficult by MoneyBlogNewz.
Condos to deal with brand new mortgage guidelines
Banking institutions have brand new guidelines for condominium short term installment loans or mortgage loans that they have to consider if they want federal entities to purchase them. The rules say that there cannot be any pending litigation about safety of the building, there must be less than 15 percent of delinquencies by homeowners and the condo can’t have too high of a percentage of renters. The FHA is also requiring that apartment buildings that have been turned into condos be inspected, which costs $1,200 per building plus $30 per unit.
The new delinquency problem
The housing boom definitely included condos. Brand new home buyers were very interested. Single-family homes had a lot of maintenance involved. Many preferred the idea of all maintenance being covered while paying a monthly fee. Most condo associations assume that between 2 and 5 percent of fees will go unpaid. There are a lot of associations that have a very high delinquency rate. It could be over 40 percent. There was an increase past year in the average delinquency rate. It was around 15 percent totals. This issue is forcing many condominium associations to do what many homeowners are already doing — making hard choices about what to pay and what to defer.
A lot of problems condos face
The regulation is keeping condominium associations in limbo about how to proceed. Owners aren’t able to re-sell in the buildings right now. This is as the percentage of units needed to sell is not there or the financing is extremely hard to get. Sometimes an owner cannot pay the mortgage or rising association fees. Then, the property can’t be resold on top of this. There really are only two possibilities that condo owners have including strategic default and renting out the property.
Articles cited
MSN
realestate.msn.com/article.aspx?cp-documentid=13107847
Chicago Tribune
articles.chicagotribune.com/2011-02-28/classified/ct-biz-0228-condos-lending–20110228_1_condo-buildings-condo-deals-condo-market
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