Why South Florida’s condo market has a two-tier financing problem
What fills the gap is a layered set of alternatives, with portfolio banks, non-QM lenders, and private lenders picking up the slack. For creditworthy borrowers and the brokers working with them, finding the right financing can be a challenge. For private lenders on the ground in South Florida, none of this is new.
Zack Simkins (pictured top), managing director at Vaster, a Miami-based private lender, said the condo financing problem in his market has two distinct issues, with the first being special assessments even on newer properties.
“There are two main issues happening right now in the South Florida condo market,” Simkins told Mortgage Professional America. “One, on existing condominiums, a lot of them — even more recent builds from the past 10 to 15 years — are getting hit with special reassessments because everyone is still sensitive to what happened at the Champlain Towers.
“Now everyone’s making sure we’re well beyond the code expectations for the quality of the buildings. But that gets passed on to the owner. And that creates sensitivities and hesitation by some lenders to offer traditional financing.”
The non-warrantable condo problem
The second issue involves the challenges of getting financing with agency loans. Older buildings are being demolished. New condos are coming to market, and their Fannie Mae and Freddie Mac statuses vary depending on certain factors. They can be approved for financing, a smaller share may not be eligible for financing, or it’s possible the eligibility status is not yet available.
