Ah, the power of the government yoke. With 2 quick moves only condo developers with the right connections will be selling well to low and median income buyers.

First, Fannie Mae and Freddie Mac made qualifying for a mortgage much more difficult. You will need to have a mortgage that has 30 percent down now if you want to play their game.

Then the FHA said, if you have our approval, the buyers only need 3,5 percent down and they will fund your loan in as little as 2 weeks.

So lets make a hypothetical example:

You have two condo developments across the street from each other. Built at the same time and with similar floor plans. Condo Complex A is FHA approved, Condo Complex B is not.

Which condo complex is going to sell quicker? And as we all know, an empty complex adds additional costs to the homeowners and the developer. So it would be incumbent for the developers and the condo boards to do whatever it takes to get FHA approval. Otherwise they will have a hard time reselling their condos.

Does anyone else see the amount of power in the hands of the government officials making this decision. And the motivation to appease these officials in any way possible?

It makes you think, doesn’t it.

The approval, from the Federal Housing Administration, means potential buyers can more easily qualify for a low-down-payment mortgage backed by the FHA — a highly coveted amenity in this era of tight credit.

Typically, it can take months for the FHA to approve a mortgage on a condo, partly because the building must meet numerous specifications and follow stringent guidelines. Beginning in October, the agency will further restrict which lenders can submit those loans.

Fannie Mae and Freddie Mac, the government-controlled mortgage companies, have put in place even tighter guidelines for making condo mortgages. And without government backing, private lenders that offer mortgages for condos require large down payments of 30% or more. But if a building has FHA approval, the borrower can get a mortgage in as little as two weeks. In addition, the buyer can get a down payment as low as 3.5%. (The FHA doesn’t make loans but insures lenders against losses on those loans.) via the WSJ.com.

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