A downtown Manhattan Web site called The Broadsheet tells the tale of a condo owner with good credit whose applications for refinancing his mortgage at Wells Fargo and JPMorgan Chase were rejected.
The banks said they based their decision on a Fannie Mae rule that discourages banks from making loans on apartments in buildings in which a single entity (even the sponsor) owns more than 10 percent of the units.
Unable to get specific answers from loan officers about how any condo where the developer retains a substantial presence (there are hundreds in Manhattan alone) could be eligible for financing, the unidentified applicant went directly to Fannie Mae and discovered the following:
“When I finally tracked down the people who are in charge of mortgages for condos, they explained to me that most banks were not interpreting these rules correctly.The Fannie Mae executive I spoke to said that banks in places like New York actually have much more leeway than they realize.”
This executive pointed out that the new rules do not apply to every bank and to every market on a blanket basis. Continue reading