As noted in my last post, Fannie Mae tightened lending guidelines for condos in Florida, as well as added a specific review process for new condos in Florida that other states’ housing does not have to endure. This new article by Oscar Musibay goes further in depth to explain how developers are responding to these restrictions by turning to the Federal Housing Administration’s mortgage insurance program for condominium lending.

Grant Stern of Morningside Mortgage Corp., just got FHA approval on The Bank, a 73-unit condo at Northeast 81st Street and Biscayne Boulevard in Miami. The process took 35 days. There are 14 units remaining, with three under contract.

He agrees that the new rules are designed to further narrow Fannie Mae’s exposure by creating lender disincentives. Once Fannie Mae approves a building at the request of a specific lender, buyers can use any mortgage.

“Once [the lender] pays, then anyone can lend in there, so there is very little incentive to do it,” Stern said, referring to the lender paying the review fee.

Currently, the only source of mortgage insurance for condominiums in all of Florida comes from this source. My company Morningside Mortgage Corporation does offer a specialized consultancy service aimed at speeding up the approval process for new and existing homeowners associations. Thus far, in only the last week, we have seen applications for 400 new condominium units for FHA approval, and expect to intake close to 10,000 units by the close of business this year. Typically, I don’t post specific plugs onto this blog, but in this case, it’s more a matter of public service to the markets that we work within. We do these approvals for the entire southeastern US.

For those who are looking to buy a home, for their own personal use, the prices are finally in line with incomes. The only way for most people to buy is with a 3.5% down payment loan from the FHA. In the coming weeks, I will fill this space with a little bit more information for homeowners about these loans. They are a little bit more expensive than a “Conventional” home loan, but in this lending environment, they are the “back stop” or lender of last resort, and they are considered an “A” loan, appropriate for borrowers with both good, average and even below average credit.