Williamsburg, NY – Developers, brokers and mortgage professionals gathered last night in Williamsburg, an area awash in pricey unsold condos, claimed that at last they see a way forward.
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Over beer and noshes at an area restaurant, conversation kept coming back to the need to help would-be buyers obtain financing, which these days means largely one thing.
Ross Weinstein, David Maundrell and other real estate professionals emphasized the importance of getting buildings approved by the Federal Housing Administration so that buyers can qualify for FHA mortgages that allow them to put down as little as 3.5% of the purchase price in cash.
“FHA is allowing buyers to return to the market,” said Mr. Maundrell, at the forum hosted last night.
For home buyers, the ability to finance of up to 96.5% of the purchase price is unheard of in these days, especially as Fannie Mae and Freddie Mac have tightened their lending standards.
In May, developers across the city flocked to apply with the U.S. Department of Housing and Urban Development for approval in the FHA-backed program. This was a program residential developers would have never considered in good times, said Mr. Weinstein. But earlier this year, Fannie changed its mortgage guarantee guidelines for new condos and conversion projects, increasing the minimum percentage of units that needed to be pre-sold or in-contract before it will purchase loans to 70%, from 51% previously.
Weinstein asked the crowd of about 80 gathered last night who had received FHA approval only one developer raised his hand.
But FHA isn’t the answer to everyone’s problems. For buildings with $1 million-plus individual units for sale, the program will make no difference. The maximum loan offered under FHA is $729,000.
Despite the hour-long pep talk, the outlook for the city’s residential market remained cautious at best. While the National Association of Home Builders recently reported improving sales and buyer confidence across the nation, Mr. Maundrell noted that New York, “is not close to the bottom yet.”
So what’s the big Deal every building could become approved if its fit the guidelines