As Condo Market Remains Tight, Miami Tower Scores Key Fannie Approval
- May 27, 2009
In the midst of the sluggish economy and tight credit market, condominium developers are having a tough time selling units. As a result, many projects across the nation have been reverted to rental or stalled outright. But in one of the country’s most hard-hit condo markets–South Florida–at least one developer is breathing a bit easier. DYL Group has received Fannie Mae approval for its recently-completed, 52-story Infinity at Brickell condo project (pictured). The rubber stamp from Fannie will greatly expand financing options for interested unit buyers, and is thus being hailed as a key asset in the overall success of the development.In January, Fannie Mae implemented new rules designed to protect new buyers from buildings crippled by defaults and unpaid maintenance fees. The program was customized for Florida because of the large inventory of condos there, coupled with the high volume of partially complete and unoccupied buildings. The requirements take into account several factors including association fee delinquency, the number of condo unit users, the amount of non-residential uses (such as retail) and the percentage of units held by an individual or group. South Florida-based DYL Group believes the Fannie Mae approval is significant because there are very few projects in the area that have been able to obtain this designation due to the strict requirements including sponsorship by a lender and a rigorous application process. The review includes a top-down analysis of both the project and the developer to ensure that the financial backing of a project is strong enough to make it successful. “The Fannie Mae approval is a key component for a development’s success in today’s real estate market,” stated John Yanopoulos, CEO & president of DYL Group, in a prepared statement. “Buyers at developments that have not been Fannie Mae approved will face challenges since major financial institutions will be reluctant to lend money to these buyers, leaving them few options aside from hard money loans where interest rates are unfavorable.” In the past, many developers turned to Fannie Mae, Freddie Mac or the private market for financing the purchase of condos. But as the credit markets have tightened and foreclosures continue to rise, Fannie Mae tightened its rules and started charging lenders to review whether Florida condominiums meet its more stringent mortgage requirements. The review requirements cost as much as $15,000.