Wow, that's all I can say! Fannie Mae just released a bulletin detailing a new Special Approval Designation for Florida Condominium Projects. As a result, you can now get financing in many condo buildings where cheap units were previously only available to all cash buyers.

Many existing condominium projects were previously made ineligible for Fannie Mae loans as a result of increasing delinquencies and foreclosures. As a result, prices fell precipitously in those buildings as the universe of potential buyers was drastically reduced. To illustrate, in a building like the Club at Brickell Bay in Downtown Miami / Brickell you could purchase a 1br unit for between $120,000 and $145,000, but it had to be an all cash transaction. On the flip side, to purchase a similar unit in one of the new buildings by the Related Group, you would have to pay almost double the price, but you would be able to get a loan. The quality of the Related Group's buildings is slightly better, but it doesn't justify paying two times the price. The difference is the financing.

Fannie Mae states in its bulletin that it is "committed to providing liquidity and stability to the condominium market". The Special Approval Designation will improve condo sales in those buildings that have:

• significanly weakened homeowners' association (HOA) budgets - association fees are not being paid by delinquent homeowners
• unpaid common expenses including pest control, property insurance, water, pool service, and garbage collection
• increased vacancies and REO's, exacerbated by the length of time it takes to complete the foreclosure process

The Special Approval Designations will be effective for either 9, 12, or 18 months depending on the project. Fannie Mae determines the projects for review, but lenders can suggest projects. I would anticipate more Special Approval Designations going forward as it is not clear to me why some buildings made the list and others didn't.

Some of the notable buildings in Miami and Miami Beach where Fannie Mae financing is now available via the Special Approval Designation are:

In my opinion, if you are able to purchase a unit in any one of these buildings at current prices with Fannie Mae financing, it is a steal. It is my expectation that prices will move significantly higher as a result. A lot of these buildings have renters who will now realize it is much cheaper to buy than rent.

This is unequivocally a good sign for the market. It will be interesting to see how many additional buildings are able to obtain the Special Approval Designation from Fannie Mae.

Initial List of Condo Projects With Special Approval Designation
Read the Full Fannie Mae Bulletin

Tags: condo, condominium projects, delinquencies, downtown miami, fannie, fannie mae, REO, special approval designation