Transcript
Hey everybody, major major announcement coming from Fanny May and Freddy Mack. If you have a condo, if you are a condo homeowner, if you're looking to buy a condo, if you're looking to sell a condo, this video is going to be really, really important for you. I'm going to digest and break down as simply as I can all the changes that were made yesterday by Fanny May and Freddy Mack. We're going to talk about the implications and a couple really important deadlines. Some of us here, including myself, we live in Florida. We have tons of condos. It's a big part of our business. So, if you are a real estate agent, please, please make sure you pay attention. We'll send out some information via email as well. All right, let's start with one of the first changes is an expansion of waiver of project review. Basically what it means is that if there is a condo project and anything that is zoned a condo, so under our property use code, if it's zoned a condo and there was 5 to 10 units, now all of a sudden we no longer have to treat that with the normal project review. So this is a major major win. So kudos on that one. We really love that one. There's a retirement of the investor concentration limits. So when a we we already know that when a primary residence or a secondary residence when they're looking to purchase a property, a condo, the amount of investors that are in the project does not matter. But when an investor wants to buy an investment property, that was an issue. That is no longer an issue. So there's a retirement of the investor concentration limit. Again, another great one right there. All right, here's the really bad news. One thing that the mortgage industry has been doing for a really long time is that there are two review processes, right? There's something called a limited review and a full review. A limited review was a process that we used when the budget for the association did not allocate enough reserves. That number was 10%. If they did not allocate 10%, we would flip from a full review to a limited review. that limited review process is going away. So the date on that will be August 3rd of this year. So we're talking in a few months from now. After August 3rd, there'll be no such thing as a limited review. To make matters worse, on January of next year, so January of 27, January 4th of 2027, the allocation of reserves for a full review, and there'll only be a full review at that point. There will be no more limited review. We just talked about it. That full review will require 15% of the reserves to be allocated. This is a major FU to all of us. This is the one really dumb thing that Fanny and Freddy just did. It's already tough to find condo associations who allocate 10% in reserves. Never mind, now they have to do 15. The reason they're doing it, we we understand, has to do with structural integrity. if the associations don't have enough money and if they're not giving enough money towards their reserves. We're seeing a foreclosures and mortgage delinquencies. So Fanny and Freddy are trying to make things easier in one way, but they want greater financial stability and that's what they're doing by forcing 15% allocation of the reserves. That is a huge number though that is going to create major issues in the conduit uh world. All right. What else do we got? Two big wins from insurance. They are removing the cash value being an issue. We used to have to get what's called an actual replacement value for the roof for the condo association. So instead of having replacement value, cash value will now work. And then also they're retiring the need for something called inflation guard. Again, both of these things have been issues. often times they have forced us to take a loan from a conventional loan where you get the lowest rates possible into what we call a nonQM loan where it's still a great product but the rates are higher so there's a premium to be paid so great win there overall here's my thoughts right we've got a lot of really good things in the short term the major major issue though is going to be getting the budgets in line so if you are condo association and you're on the board of your condo association, you need to start having this discussion right away. It will affect how your homeowners are able to sell their properties, whether the the buyers are going to have conventional loans. For lenders like ourselves, we specialize in nonQM. We've been doing this type of product for a really long time. Come 2027, my prediction is you're going to see 75% of the condo projects are going to require a nonQM loan. Most retail banks don't use this product. If you want more information about what's going on in the condo market, how this is affecting you, please send us a DM and we'll respond to you as quickly as we can. Thanks so much. Emanuel St. Germaine Choice Markers Group.