Last month we asked the question: “Will the sub-prime crisis impact community associations?” (www.condoissues.com, March 20, 2008) We predicted that mounting foreclosures of condominiums and town homes would greatly impact community association budgets as owners abandoned properties leaving unpaid assessments. Lenders holding first mortgages on these properties would have no obligation to homeowners associations to cover these deficiencies, leaving large gaps in association funding.
Now, a new issue is looming. Rules for government-backed mortgages and some private mortgage insurers are being re-written to toughen lending standards for condominiums. ..
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In reviewing the AIG United Guaranty ineligibility criteria on its website I found that what has been described as total redlining of properties in declining markets (includes SFRs also)is more of a tightening of criteria for those markets. For example, in a declining market and for a 1 unit primary residence, loan amounts up to $417,000 with LTVs higher than 90% or credit scores lower than 680 are ineligible. This is not a blanket redlining that some articles in the press seem to indicate.
ReplyDeleteMark Zoeller
MarkZoe@aol.com
29776 Horseshoe Dr
Coarsegold, CA 93614-9185