Hello,

I'm trying to buy a condo in California and was told by the seller's real estate agent that I had to put at least 20% down. He said this was a Fannie Mae requirement because the Home Owners Association had very low reserves -- many owners were not current on their monthly payments. There are about 45 total units.

It is a bank owned property.

Has anyone heard of this Fannie Mae requirement? I have googled for an answer and checked their website without success.

Thanks,

Pat

I'm not sure that it's exactly a Fannie Mae requiremetn, but I know that when I went to get a mortgage recently, the application paperwork said in big letters that, since this is a declining market, the bank wouldn't do any loans for 100% financing. And that they have seriously tightened up on the 80/15/5's that they used to do. The bank is concerned that they are going to be stuck with a loan for more than the property is worth if the values in the area keep declining and you are stretching because you don't have the 20% down payment.

On May 16 Fannie Mae issued a press release that said: "The rumor is true. Fannie Mae has done away with their previous high down-payment requirements for distressed markets. They are now accepting down-payments from 3-5% for all loans that it guarantees for homes in areas of declining value! Fannie Mae hopes that in changing their down-payment policy it will in turn encourage those buyers who are sitting on the fence to go out and place an offer on a home. They also are no longer defining these areas by zip code, but instead are now going off appraiser recommendations for what areas are considered distressed. This change may come as good news to homeowners who fear their home value may have been declining due to distressed neighborhoods in the same zip code."

It appears that the down payment policy varies by neighborhood, rate of foreclosures and abandonments. I have no way of knowing what the situation is in your particular area but your real estate broker should know.

Yes, it has been on the news, that there are now legal cases against many of the lenders because they are requring various down payments because of area. Of course there is a discriminaton issue being claimed since many of the depressed areas are minority, not all by any means but then it only takes one to make a claim and a law suit.

But yes the zip code can make one issue, but in this case it appears they are afraid that the HOA does not have money and that there could be law suits from their debts. I may be worried If I was you about buying into that HOA if they are going to have unpaid debts for the HOA that you may end up having some liablity for.