These condo units are Fannie Mae eligible for  financing as long as the commercial space is 20% or less. Programs include Jumbo Mortgages, both fixed and adjustable, conventional and FHA along with many other guidelines has a 25% ratio. Ineligible properties include those who are operated or managed as hotel, offer registration services/offer rentals on a day to day basis, have the name hotel or motel, limit the owners ability to occupy the property.

The actual language in Fannie Mae guidelines “The lender must determine that nonresidential space does not exceed 20% of the project’s total square footage”

Builders, Condo Buildings and unfortunately some Real Estate companies have preferred lenders. Is this really good for the buyer, ah no. Listen up Realtors, Builders and Condo Buildings, don’t be afraid to learn and use the services of other mortgage lenders who know the business. Some point to the rule of 3. Have 3 people in any given industry ancillary business who are great and let the client pick. Builders and Condo units most can argue are the worst. First of all Builders who have an in-house lender and refuse to pay for title and other seller paid standard paid closing costs should be illegal. It is ethically wrong to force some into a worse mortgage and make them pay more fees. Condo Buildings, same thing if you refuse to pay for certain credits toward the buyer because they choose to attain financing elsewhere which is better, shame on you. Brokers and Owners of Real Estate companies, why force or drive your Realtors to use a preferred lender when it might not be in your buyers best interest. Secondly why not let your agents develop their own relationships with mortgage lenders who can offer better service and rates to your clients.  I remember when I first started out in the mortgage business with refinances only, thanks Research Lending. We had to use one title company which was OK but nothing special. I now use primarily two title companies and try out others from time to time. The point being why limit your business circle to one partner. Sure, if you work with someone your comfortable with or maybe not so comfortable but you know they do any amazing job stick with them. If not try someone else, and if they don’t work out get recommendations for other good business partners. For condo developments, if your lender has an in-house program because you have a mixed use building or a niche product your doing the right thing, but sadly most of the times this is not the case. For larger real estate companies like Keller Williams and JB Goodwin to have a preferred lender makes one wonder why? Why not let your agents choose? How does their business relationship with one particular lender benefit the buyer?

MARKET RECAP

We knew changes in FHA-insured loans were coming. Now it appears they are almost here. Last week, the FHA said it would tighten loan requirements on loans it insures. Specifically, it would raise the MIP to 2.25% – effective this spring – and then seek permission to increase the percentage again.

The FHA also proposed requiring borrowers with credit scores below 580 to put up a 10% down payment. Those with higher credit scores would still qualify for a 3.5% down payment. In addition, the FHA proposed reducing seller concessions to 3% from 6% of the mortgage. Both proposals will require a public comment period before taking effect.

We have been warning for the past month that anyone considering an FHA-insured loan should act now. We stand behind that warning. Fact is, any changes instituted by the FHA will only increase the cost of an FHA-insured loan.

Borrowers might be feeling a little dour over the prospect of paying more for an FHA-insured loan, but they are likely not feeling as dour as homebuilders are. The homebuilders’ sentiment index declined again in January to 15, which means that only one in six builders thinks the market is “good.”

We could argue, persuasively, that homebuilders have done everything possible to set the stage for a recovery: they have culled inventories and cut new construction to a virtual standstill. For all of 2009, homebuilders started only 554,000 homes – the lowest since 1945. Back then, there were only 132.5 million Americans. Today, there are 307 million.

Higher prices would certainly help lift homebuilder spirits. On that front, things are improving. Radar Logic’s monthly Residential Property Index (RPX) showed year-over-year price increases in eight of the 25 markets surveyed, the most since July 2007, when the RPX price composite peaked. Radar Logic said that increased affordability is helping to boost prices, as well as sales. On the latter, November home-sales volume increased year-over-year and month-over-month in all of the 25 metropolitan markets the RPX covers.

Low mortgage rates were no doubt a contributing factor to the sales rally. They remain low today. In fact, rates dropped (by a few basis points) across the board for the third-consecutive week. Do not expect much more, though; we have been saying that any improvements in mortgage rates will be incremental at best, and that has been the case.

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