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100 Florida condo projects allow Fannie Mae approval to expire

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[Update 1: clarifies expiration of Fannie Mae approval] In the last six months, 100 new condominium projects in Florida allowed their one-year Fannie Mae financing approval to expire, which may make it tougher for buyers looking for units in those buildings. CondoVultures, a South Florida real estate adviser, said there would have been a steeper drop in the amount of condos with financing had it not been for 31 newly approved projects in the last six months. A spokesperson for Fannie Mae said approval for financing is valid for one year, and that these condos allowed it to expire. Lenders can request renewal, which Fannie usually grants. After the collapse of the origination market for condos, Fannie launched another initiative in Florida to review projects for future financing. Six employees carried out the reviews and gave special approval designation to projects deemed sufficiently stable. As of Tuesday, there are 160 new Florida condos with that designation, meaning lenders could write mortgages for the units and then sell them for securitization to Fannie. "Financing a new condo in Florida just got tougher for those buyers who lack the cash to purchase a unit with no mortgage," said Peter Zalewski, a principal with CondoVultures said. Zalewski also said a surge in new condo project approvals arrived in 2009 and through the first half of 2010, but that many failed to renew their certification with Fannie. "The unanswered question is, 'Did the scrutiny become more stringent or did the projects simply decide the approval was unnecessary given the resistance by banks to originate mortgages for new, Florida condo purchases?'," Zalewski said. Lucas Lechuga, with Miami Condo Investments, said some were set to expire a year after getting approval in January 2010. But, he said, once banks begin lending during that original Fannie-approved certification, they use information provided during that time period and that lending shouldn't be tied up. "Even though their Fannie Mae approval expired, it did bring in some financing loans," Lechuga said. "There shouldn't be a problem getting a mortgage in the future." Write to Jon Prior. Follow him on Twitter: @JonAPrior

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