In a letter to the chief executives of Fannie Mae and Freddie Mac, Reps. Barney Frank (D.-Mass.) and Anthony Weiner (D.-N.Y.) urged the GSEs to ease the recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery.
In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units had been sold, up from 51 percent. Fannie Mae also won’t purchase mortgages in buildings where 15 percent of owners are delinquent on condo association dues or where one owner has more than 10 percent of units. Freddie Mac plans to implement similar policies next month. Officials at Fannie Mae report that the 70-percent rule does not apply to loan applications submitted through an underwriting program used by major lenders. Developers also are able to apply for exemptions to the new policies for loans that are manually underwritten.
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