Tougher Mortgage Rules May Leave Condo Sellers In a Bind

Lakewood, California

By Bernie Germani

The condominium segment of the market accounts for a large number of foreclosures because of its popularity among investors and first-time home buyers.  Due to the rising number of foreclosures in these communities, many lenders are looking more closely at the makeup of the entire condo complex prior to extending loans to prospective buyers or to owners wanting to refinance.

New lending guidelines often require higher fees and larger down payments of condominium buyers.  Because of the challenges associated with financing condos, some condo owners are finding it difficult to sell their units.

The policies are also exacting higher fees and larger down payments from condo buyers while limiting where they can live.

A lot of foreclosure-related losses have come from condo lending, pushing prices lower and wrecking condo association budgets. Some areas have had particularly dramatic drops in sales volume — as much as 50% down from 2006 in some Washington, D.C.-area counties.