Florida condos falling on blacklist
A group of condos have made a creditor blacklist for their involvement with speculators or prices in freefall. The issue is a result of new Fannie Mae lending practices and could shut down 1 in 4 Miami condos. Dan Grech reports.
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Steve Chiotakis: Well, Uncle Sam's poured a lot of money into banks here at home to jump start the housing market. But some of those financials seem to be jumping on a bandwagon. They're refusing to lend to certain condo complexes, regardless of a buyer's credit history. It is a trend that's slowly spreading across the country. From Miami at WLRN, here's Marketplace's Dan Grech.
Dan Grech: The names on the Bank United blacklist evoke an era when buying a condo was like minting money. The Jade, Sunset Harbour, Quantum on the Bay.
In all, 191 condo complexes made the list. because they're saturated with speculators or prices are in freefall. Most of the condos are in Miami. Bank United declined to comment on its "non-permissible" projects list.
Donna Berger is executive director of the Community Advocacy Network. She says properties on the list are essentially untouchable.
Donna Berger: If Mrs. Smith goes to sell her unit, she's now going to have a problem with her potential purchaser in finding a lender who's going to make a loan in that unit in that community. She's stuck.
Analysts say other banks are drawing up similar blacklists on projects in Nevada, Michigan and California, though the lists are rarely made public.
The problem is compounded by tough new lending standards enacted last month by government-backed Fannie Mae. Before Fannie will write a mortgage in any new condo building anywhere in the U.S., 70 percent of units should be sold. It used to be just 51 percent.
Analysts 1 one in 4 condo buildings in South Florida could be shut out of financing from Fannie and other lenders that take Fannie's lead.
Jeremy Resnick: When a lender won't lend in a building, that's basically the death of the building.
That's Jeremy Resnick. He's with UpsideDownFlorida.com, a firm that helps people who owe more than their home is worth.
Resnick: If no one can get financing, no one can buy the available units, eventually those units go into foreclosure. When multiple units go into foreclosure, homeowner's association fees aren't being paid, so the common areas don't get kept up. The cable gets cut off, the electricity gets cut off. It's a spiral that goes out of control.
Experts say with blacklists, banks are trying to turn back the clock on their loose lending practices. But they can't erase the dozens of gleaming condo towers that have emerged over the past decade. Or the thousands of people who staked their fortunes on a piece of real estate in the sky.
In Miami, I'm Dan Grech for Marketplace.
Comments
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From tampa, FL, 04/13/2009
I own a small business in florida www.greatglam.com and last year I was considering purchasing one of these condos for use in storage and to stay in when I was working in the office as I live in a different city than our main office and with the low condo prices it came out cheaper than hotel. I could not find anyone who would make the loan- I have great credit but banks don't want to loan for a condo . Its really a catch 22 even if you find a potential buyer they can't get financing. That swampland in florida joke should be changed to- if you believe that I've got a condo in florida...
From QUEENS, NY, 04/12/2009
The comment above is absolutely correct. Most of these sellers would seemingly rather fall into foreclosure than attempt to complete a short sale. While developers envisioned a more upper class environment, they unfortunately must humble themelves. Besides, the illusion that everyone's a millionaire was only the bubble talking. In reality, most Americans I know are struggling with low pay and alot of debt. Add in this recession and many are finished so maybe these buildings need to reflect the reality of it's local economy....
From New York, NY, 04/10/2009
Such absolute nonsense. Let the speculative sellers lower their prices low enough that an all cash buyer will actually want to step up to the plate!
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