Why is it harder to get a loan on condo verses a single family?

Why are there so much regulations placed on condo loans? It is  getting just as bad as a co-op unit? Why do the lenders now see condos loans as such higher risk? One reason I have been hearing is that the value of the individual units in a complex suffer when there are a few foreclosures units. Not only are lenders demanding  20 percent down but  are charging a lot more  fees and adjustments in the pricing. Additionally lenders is now requiring  condo associations to  keep more  money in reserves. Traditionally.,condos are popular with first time home buyers, but with these new regulations may be not.
  • June 22 2009 - Elmhurst
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Answers (9)


Most condo's have always been high risk and placed under extra underwriting scrutny. I've always been told that its the marketing time on a condo. If the condo goes into foreclosure it takes a lender a much longer time to get it off the books. Since that is long standing history, then they charge you for it.

George, compare marketing times in your area and maybe that will be your answer.

Why does Barney Frank sound like he is missing all his teeth?  Why can't his government healthcare plan cure him?
  • June 24 2009
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I am ashamed to be from Massachusetts whenever he opens his mouth!

He talks out both sides....It wasn't too long ago he was pushing lenders into making more loans to low income borrowers...that has worked out well!
  • June 24 2009
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Ya Barney will take care of it.  He's done such a wonderful job with everything else....



  • June 24 2009
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Shapiroamg: Barney Frank suppose to talk to Fox TV today about housing issues and he might bring up the condo problem and offer some solution.  
  • June 24 2009
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Barney Frank is on the case.  As AA says, it is the risk. There are options (not widely available) for less than 20% down, but the project better be in good shape finacially and owner occupancy wise.

I've had conversations with a possible buyer who wanted to purchase a unit in a 3 unit development. The issue? The two other units were being forclosed. No matter what I said, the potential buyer could not get past the fact that he was getting a bargain unit.

head.palm.
  • June 22 2009
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The higher the risk on a loan the more expensive the loan.  The mess that we are in is a result of thinking that regardless of risk a loan should be extended....Currently (and likely not forever too bad) lenders and investors are realizing that some risks just shouldn't be taken....Like condo's that 50% of the homeoewners are  30+ days behind on Condo fees and the building is 20% pre-sold with 90% investor concentration....
  • June 22 2009
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Question is: what are buyers doing to purchase these foreclosure condos at these  lower prices, considering that even PMI is now rejecting some condos out right?   
  • June 22 2009
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Your rant has been heard.

  • June 22 2009
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Was that really a question?
  • June 22 2009
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