Haven't we been down this road before?

(Reuters) - Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said.

In March, Fannie Mae (FNM.N)(FNM.P) said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent, the paper said. Freddie Mac (FRE.P)(FRE.N) is due to implement similar policies next month, the paper said.

In a letter to the CEO's of both companies, Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner warned that a 70 percent sales threshold "may be too onerous" and could lead condo buyers to shun new developments, according to the paper.

The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos, the paper added.

In an interview with the paper, Weiner said the rules have "had a real chill on the ability to get these condos sold," at a time when prices of condos have fallen enough to attract potential buyers


http://www.reuters.com/article/GCA-Housing/idUSTRE55L39120090622

Bawney Fwank, and a Weiner. Match made in..........hell.

I'm not sure I understand this. Some one has to buy the first - and second and third - unit in a condo development, and they probably can't pay cash. Why wouldn't a bank lend money to those who buy the first units that open up in a condo? Now if the condo is built in a ghetto and the units are never gonna' sell, that would make some sense then, but no bank would lend to a builder for a development so bad or stupid it wouldn't sell, would it?

My bank sends its own inspector out to my house every two weeks to ensure that all the draws I've made and materials purchased and contractors paid have resulted in commensurate progress in completing my house. Of course Oly Fed didn't need any bailout money either.

Sg

Sarcasm or a rhetorical question?

Coincidentally (or not) there are a lot of great deals on bank owned real estate right now. Much of it selling for less than the bank loaned.

My neighbor sold his house last year for 389,000 today it's listed for 239,950. I know that the guy who bought it didn't put 150,000 down.

Condos sales are few and far between currently so this may not make much difference. Most lenders are reluctant to loan on buildings that have a high percentage of rentals versus owner occupied.
If potential buyers 'shun' new condo projects, then the lenders won't loan to build them. Eventually, the condos for sale will be sold and once the market demands more then the lenders will most likely loan on new projects.

As RvW said, prices on bank owned properties, in some cases, are a bargain. A particular residential property had $380,000 owed on it. A buyer offered $340,000 on a 'short sale', meaning the lender would take less for a payoff on their loan. The buyer dogged them for an answer almost every day for 4 months, but nobody would make a decision. Eventually, the trustee sold the property. The place was then put up for sale by the bank for $278,000. and it sold, because there were several parties interested, for $299,000. It was appraised for the financing of the purchase for $375,000. in today's market.
So, because the bankers were so scared of making a decision to accept less money than what was owed, the bank ended up farther in the hole then they would have had somebody made a decision on the initial offer.
Hard to figure out what the bankers were thinking -or not.

Chuck---Like your story a friend of mine offered 900,000 on a property listed at 1.2 (originally 1.6) the seller agreed then tried to pull a fast one and said that he wanted 925,000. This pist of my friend who withdrew and was not in interested in dealing with the seller. He followed that property and it was sold for just over 600,000 by the bank.

A huge loss on new construction.