NEW YORK - Fannie Mae, the largest funder of U.S. home mortgages, on Thursday said it is making it easier for some Florida condo buyers to qualify for loans in a bid to stabilize one of the worst-hit real estate markets.
The housing finance giant said it is reassessing hundreds of Florida condo projects to see if they are sufficiently stable enough to qualify for funding, even if they don't meet current requirements, Fannie Mae said in a statement.
These projects would get a special approval designation from Fannie Mae, clearing the way for hamstrung Florida lenders to originate loans and help spur a recovery, it said.
This new initiative is geared toward providing maximum support for Florida's distressed condo market, said Karen Pallotta, executive vice president of Fannie Mae's single family mortgage business.
Fannie Mae has become a key conduit for U.S. government housing policy since massive losses on defaults led regulators to seize control of the company in September 2008. As the credit crisis caused a deep-freeze in private mortgage lending, buyers must rely more heavily on Fannie Mae, Freddie Mac and the Federal Housing Administration that have each tightened requirements since the housing boom.
Fannie Mae's participation in government programs such as foreclosure prevention plans has added to its costs and hurt its ability to become profitable. Easing condo requirements comes as Fannie Mae and rival Freddie Mac have needed about $111 billion in taxpayer dollars to plug deficits and stay in business as loan investors and guarantors.
Last month, the U.S. government pledged to back Fannie Mae and Freddie Mac no matter how deep their losses for three years.
Fannie Mae began its new program by extending special approvals to 51 complexes concentrated around Miami where condo listings are down from 25,424 in mid-2008 but remained a lofty 16,709 in December, according to the Southeast Florida multiple listing service. That doesn't include condos in the foreclosure process or held by developers that could hit the market.
The restrictions that they had were a little onerous when thinking of the kind of inventory that we've got, said Maurice Veissi, a first vice president with the National Association of Realtors and an agent in Miami. There is more around.
In late 2006, there were about 67,000 condo units that were planned, Veissi said. Prices for Miami-area homes had fallen nearly 49 percent since then, before rebounding slightly since May, according to Standard & Poor's/Case-Shiller indexes.
Fannie Mae had been making exceptions on a case-by-case basis, it said. Rules that might prevent financing include that a building must be at least 51 percent owner-occupied, have a maximum 20 percent of non-residential space and have a 10 percent reserve in its projects budget.
(Editing by Kenneth Barry)