New requirements could help condo buyers

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Although tighter underwriting guidelines for condominiums by the Fannie Mae and Freddie Mac organizations might make it harder to get a loan or to sell a condo, it also might make buying one more financially sound.

Both companies want to ensure that HOAs (home- ow­ners associations) are financially stable. “Potential problems exist if the HOA is … controlled by a developer … on the verge of bankruptcy,” an increased likelihood in a generally overbuilt market that continues to experience decline, says Ed Craine, vice president of California Association of Mortgage Brokers.

He says that to help prevent further plummets in sale prices, Fannie Mae and Freddie Mac also are scrutinizing ratios of owner-occupied units to investor-owned units, as owner-occupied homes generally tend to maintain their values better.