What if Fannie Mae Won’t Approve a Mortgage for My Condo?

by Isaac Benmergui, Esq on June 2, 2017

Fannie MaeThere are a few factors that could cause Fannie Mae, the standards-bearer for the mortgage industry, to fail to approve certain condo associations. That becomes a huge problem for sellers, because most mortgage lenders use Fannie Mae’s guidelines. If your association doesn’t meet those guidelines, then suddenly only cash buyers have access to purchase your property. So what do you do?

How it Can Happen

What would cause Fannie Mae to not approve mortgages for your condo association? It could be one of several factors. Your condo association must have a certain amount of capital on hand for repairs, improvements, and emergencies. It must carry flood insurance if it’s in a flood zone. There are other requirements, too.

If your COA doesn’t meet the requirements, Fannie Mae simply refuses to finance properties in the COA, and likely other lenders will follow suit. This makes it nearly impossible for anyone to finance a property in the COA, which means you’ll have to lower your asking price to market asking for cash-only properties.

Another option is to follow your COA rules for petitioning the governing body to take out flood insurance, add to the capital on hand, or whatever requirement is missing. This would help every unit in the COA by increasing their market value.

How to Find out if Your Community is Eligible for Fannie Mae Financing

When you are interested in buying a condo, you’ll have to submit your personal financial information for the loan process, and also information about the condo association as well. The bank will review how many units are rentals, how many people are behind on dues, and how many units are owned by one individual or company.

Call Miami Real Estate Lawyer Isaac Benmergui at 305.397.8547 and set up a no charge, no obligation consultation to discuss your case. We have over a decade of experience handling Real Estate and Civil Litigation cases throughout Miami and South Florida, and will use our expertise to help your case to the best of our abilities.

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