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April 23, 2008

Cash for Condos Grows Scarcer; Equity Lines Vanish

Syndicated real estate columnist Kenneth Harney reports that would-be condo buyers across the country are about to find financing harder to come by. Fannie Mae and Freddie Mac have both recently issued guidelines that require loan officers to perform due-diligence research on characteristics like a condo's legal documentation and the percentage of units owned by investors, and for lenders to assume legal and financial responsibility for the accuracy of their assessments. "Even if you had an 800 FICO score and 50 percent equity," says one mortgage broker, "you still might not be able to get a condo loan." As Harney writes, "It depends on whether the underlying project can pass the underwriting tests, is in a declining market, and has a lender 'concentration' limit on it. Some lenders refuse to finance more than a set percentage of units in a single condo project to limit their risk." At the same time, many home owners are starting to see big reductions, or freezes, on their home equity lines of credit. A poster on the Forum recently wrote the following: "Logged into my bank account today to find that my line of credit had been cut down by more than half. When I called the bank they told me it was due to a "reduction in property value". I know things ain't peachy, but I haven't noticed prices going down that much! Has anyone else had experience with challenging this type of decision? I put 40% down on my home, fer chrissakes, got a great lease on my rental unit and my credit is well above 750. What gives?!" As the Times has reported, banks are freezing equity lines "even in areas where property prices are rising." Ouch.
Condo-Loan Restrictions Tightening [Baltimore Sun]
Incredible Shrinking HELOC?? [Forum]
Photo by Evaonne Hendricks.

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Comments

I'm shocked this is getting such traction.

The current credit crunch was caused by people using their houses, condos and co-ops as piggy banks to remodel their homes or purchase a new Benzo.

So its no surprise that banks are reacting like this.

Its called risk management and the banks are just waking up.

Posted by: guest at April 23, 2008 9:58 AM

https://www.ugcorp.com/decliningmarkets.html

Posted by: guest at April 23, 2008 10:16 AM

"Its called risk management and the banks are just waking up."

Pathetic though that these guys just go from one extreme to another. Instead of being really really loose with lending, now lets try being really really tight with lending. These eggheads have no idea what they are doing at the end of the day...

Just like wall street - First tech Bubble, then Housing Bubble, now Comodities Bubble...When that bursts, maybe they will come full circle and start a brand new tech bubble again. Idiots every one, sad commentary on the human condition...

Posted by: guest at April 23, 2008 10:19 AM

we just had our banker at Chase suggest that we apply for an increase on our Home Equity line.

Posted by: guest at April 23, 2008 10:30 AM

Lower home equity lines means that buyers actually have to sell before they can buy. Should make the slowdown slow down faster.

Posted by: guest at April 23, 2008 10:34 AM

"eggheads" implies that they are smart people with a theory that tells them what to do. Don't blame the smart people or the theorists for this.

This is just straight out opportunism: the Republican deregulationists created a system that even not-so-smart bankers can play.

Step right up and take the bet. If you win, you get a big bonus, your employer makes lots of profits for its shareholders, homebuyers can pay prices they never would have dreamed of, builders and homesellers get rich. If you lose -- the taxpayers cover your losses.

You don't need to be an egghead to borrow and lend at Greenspan's cheap rates on those terms.

Posted by: guest at April 23, 2008 10:44 AM

Lower home equity lines means that buyers actually have to sell before they can buy. Should make the slowdown slow down faster.

Posted by: guest at April 23, 2008 10:46 AM

Lower home equity lines means that buyers actually have to sell before they can buy. Should make the slowdown slow down faster.

Posted by: guest at April 23, 2008 10:46 AM

This isnt news - the only thing that would be newsworthy here is that they weren't doing these reviews before.

However - there is no question in my mind that this is posted on Brownstoner as part of his (thinly veiled and completly incomprehensible) campaign to trash the condo market

Posted by: guest at April 23, 2008 11:32 AM

Lets see.. You paying rent on a 2 bedroom apartment of 2000.00 a month. But your retarded ass wants to be in the "Metoo" crowd and buys a 2 bedroom condo! With carrying costs over 4500.00 a month.

Plus where did you buy this condo? You went fringe and bought in the Ghetto! You did the "edgey" thing and now your "Investment" is blowing up in your face!

Look here assholes, we are going to have a fucking depression! If there are no more "Ponzi" financing , the whole thing falls apart!

Here look at this video, this is what happen when a neighborhood goes down the tubes!

Ruins of an Empire

http://www.youtube.com/watch?v=Fn1jw7l2ZRw

The What

Someday this war is gonna end...

Posted by: guest at April 23, 2008 11:32 AM

good, this should keep prices more reasonable

Posted by: guest at April 23, 2008 11:33 AM

Hey tWhat, are they charging $2K for a 2 bedroom in Lodi?

Your doom and gloom is so tired.

btw, fucktard, I live in the hood and my house is still worth more than when I bought it and the mortgage is less than your 2 bedroom. And with my recent raise and promotion I will have more money to pay down my mortgage if I like or, save it for retirement. Of course, tWhat, you have to have a job first before you can retire. I hope social security is still around when you turn 65 in 20 years. Asshat!

Posted by: guest at April 23, 2008 12:49 PM

12:49, looks like the what hit a nerve.

Whenever I hear people justifying a real estate purchase it means 1 of 2 things. 1st they're in over their heads and are trying to convince you and themselves they made a good choice.
Or 2nd that they have absolutely no idea how the financial market works and they're only comeback to a gloomy financial outlook is to put others down or lie about their own financial situation.
Which one are you? I would say both!

Posted by: guest at April 23, 2008 12:57 PM

No 2br apts for $2000 a month in brownstone brooklyn.

Posted by: guest at April 23, 2008 1:04 PM

Haha you wish. Actually I am selling my apt in Paris for 6x what I bought it for in 2002. With the current currency exchange for the euro I should be up over 10x my investment. To each his own, no risk no reward. While you cry about the sky falling and the stock market tanking the smart people see opportunities.

"Lets see.. You paying rent on a 2 bedroom apartment of 2000.00 a month. But your retarded ass wants to be in the "Metoo" crowd and buys a 2 bedroom condo! With carrying costs over 4500.00 a month."

Posted by: guest at April 23, 2008 1:31 PM

"Lets see.. You paying rent on a 2 bedroom apartment of 2000.00 a month. But your retarded ass wants to be in the "Metoo" crowd and buys a 2 bedroom condo! With carrying costs over 4500.00 a month."

Posted by: guest at April 23, 2008 1:32 PM

12:57 - I think that is a bit overstated - some justifications for a RE purchase are legitimate. And sometimes over a given timeframe or due to availability of certain class of houses - buying can make way more sense then renting.
But I totally agree, that so many people have a total lack of understanding of finances and just repeat like a mantra 'renting=bad, owning=good' - not recognizing the costs and risks associated with both.

Posted by: guest at April 23, 2008 1:46 PM

"Your doom and gloom is so tired."

Nope asshole, it's picking up some serious momentum! Gas 3.59 is at fuckwad!

" I live in the hood and my house is still worth more than when I bought it and the mortgage is less than your 2 bedroom"

Where, Plus how much will you lose in the crash?!

"and with my recent raise and promotion"

No Blog masturbation, please!

"Of course, tWhat, you have to have a job first before you can retire. I hope social security is still around when you turn 65 in 20 years. Asshat!"

Good fuckwad, we are the same age. You will fondly remember the 70's right? Drugs, High unemployment, Inflation, urban decay and other shit! There is a credit crunch going on Asswad and no one will be able to get a mortgage! have fun getting assraped, maybe Biff can help you with some ointment!

The What (I love the justification on being a asshole, it's real cute)

Someday this war is gonna end...

Posted by: guest at April 23, 2008 1:54 PM

"Haha you wish. Actually I am selling my apt in Paris for 6x what I bought it for in 2002. With the current currency exchange for the euro I should be up over 10x my investment."

What an amazing coincidence! I'm selling my villa in Tuscany for 14X what I paid for it in 2000! I stand to make 18X my investment with the exchange rate. What a life!!

Posted by: guest at April 23, 2008 2:21 PM

Oh, The What, there you go again with the shout out to me. It's really flattering that you're so obsessed with me and your own thoughts of reach-arounds, ass-raping and locker rooms. Your coming out of the closet must be a big weight off your shoulders, but I feel sorry for the gay community for having to include you as one of them. Remember The What, the more you deny it, the more it's true. You taught me that very important lesson, didn't you, my friend?

I know it's difficult for you to realize that not everybody has to rent a place in Lodi, NJ like you and some of us will always be able to afford to live wherever we want and be employed, but please don't kill yourself thinking about it, ok? Just take your meds like a good boy and relax.

Posted by: Biff Champion at April 23, 2008 2:26 PM

"Haha you wish. Actually I am selling my apt in Paris for 6x what I bought it for in 2002. With the current currency exchange for the euro I should be up over 10x my investment."

I am looking forward to seeing you on a Carlton Sheets info-mercial!! Remember, please hold up the check for the camera, showing how much "profit" you made on the deal.

Benson

Posted by: guest at April 23, 2008 2:48 PM

Hey Biffie Boy! Guess what I just came from the gas station! Regular is at 3.65 a MOTHER F----- GALLON! Wrap your little mind around that! So I asked the attendant "How is business?" He said " It's real slow". The station on Vanderbilt and Atlantic and it's in Brooklyn!

I know the ----tards who post on this site don't or can't afford a car! Gas is Inflation and that is killing the economy. I will be glad when Wall Street crashes because that will be the event horizon of the depression.

The What

Someday this war is gonna end....

Posted by: guest at April 23, 2008 3:27 PM

Hey The What, old friend! That's great news regarding the gas. Thanks for keeping me posted. These hourly updates from you regarding gas prices are very handy. I hope you have enough fuel to get back to Lodi from Brooklyn, chappie.

I think it's wonderful you know so much about the posters here, but since we're so close, you probably should know that I can afford to have a car and the gas that goes in it. And that will still be true if gas is $10 a gallon plus. And yes, please rest your worried little head. I'll also be able to still afford to eat even with inflated food prices.

Oh, The What, you just can't contain yourself from expressing your newfound fabulous gay side. I didn't realize you've become fascinated with gerbils though. You're getting a little kinky, even by your standards, big guy!!

Posted by: Biff Champion at April 23, 2008 4:11 PM

there are no 2000 2 bedrooms period. silly statement.

friends are paying $2800 and $2900 for one bedrooms in williamsburg.

after taxes i'm paying $3500 with ccharges on a 2000 sq ft brand new condo from 2006 in a solid area. no way i can get a rental of the same quality for that. NO WAY.

Posted by: guest at April 23, 2008 4:33 PM

"there are no 2000 2 bedrooms period. silly statement."

4:33, that's hardly the first silly statement from The What and I strongly suspect it won't be the last. In fact, he'll likely make a few more silly statements within the next hour or so...

Posted by: Biff Champion at April 23, 2008 4:37 PM

12:57 and the tWhat, 12:49 here.

You two may be suffering from the changing economic times, but I have money in the bank and equity in the house. Too bad you two don't.

Hey tWhat, I own a car and can handle the increases in gas prices and can afford a new car if and when I need to get one. Not everyone in this city is suffering.

12:57, the tWhat is mentally ill. Anyone who really thinks and wants the world to crash needs help and has no vested interst in seeing that things get better for themselves or anyone else. I am doing really well. If you can't handle it, keep that to yourself. Your attempt to insult me looks a lot like envy.

I do remember the 70's, tWhat, and there is one big difference between then and now - I got an education that allows me to have a career, make a lot of money, own a home without over-stretching my credit, own a car, travel, save for retirement and weather this storm. For someone your age and "experience" with the city's ups and downs, you really have a lose grip on how this all works in the long run. Too bad you never got much further than ps 58? If this city can recover from the 70's, it can recover from this crisis.

It is good to see you back tWhat. I had no one to insult these past few weeks.

Posted by: guest at April 23, 2008 6:21 PM

"You two may be suffering from the changing economic times, but I have money in the bank and equity in the house. Too bad you two don't."

6:21 You are OK with rising inflation, I'm not!

"Hey tWhat, I own a car and can handle the increases in gas prices and can afford a new car if and when I need to get one. Not everyone in this city is suffering."

Not my point fucktard!

"I do remember the 70's, tWhat, and there is one big difference between then and now - I got an education that allows me to have a career, make a lot of money, own a home without over-stretching my credit, own a car, travel, save for retirement and weather this storm. For someone your age and "experience" with the city's ups and downs, you really have a lose grip on how this all works in the long run. Too bad you never got much further than ps 58? If this city can recover from the 70's, it can recover from this crisis."

No you don't! If you did you would be very upset at hugh inflation! I know you and others are mad at me. Why? because I see your demise coming around the corner. There are food shortage going on around the world and if someone is hungry enough the will fuck your bitch ass up for yours! I have money and I'm very upset that inflation is robbing me of my spending power! You fucking keyboard warriors jagoff all day in Brownstoner and to make matters worse, you can't see the decline on this blog! No one gives a fuck about Real Estate no more , it's about feeding our families!!!!! So fuck you and Biff.

Plus when the day the Stock Market Crashes, I will carpet bomb this mother fucking blog!

The What

Someday this war is gonna end....

Posted by: guest at April 23, 2008 8:05 PM

Oh by the way assfucks, You can get 2 bedrooms under 2000.00. Your landlord are ass-raping you!

Plus if someone is paying 2900 a month for a 1 Bedroom in Billyburg, GOD bless that landlord. I hope he/she don't use nay grease on ya!

The What

Someday this war is gonna end...

Posted by: guest at April 23, 2008 8:08 PM

The What, another shout out to me. You're so sweet, but please try not to spend all your waking hours thinking of me. I know you want to fuck me, as you said above - but you have real estate in Lodi to sell, dear. You will have time for "nay grease" later.

I know you're a very bright boy and understand it's all part of an economic cycle and we cannot experience stagnant prices and high home values at all times. I just know you understand because you've so helpfully reminded us about this over and over. But I've made it through downturns as have countless millions and I'm pretty confident I'll make it through this one too.

Nobody's mad at you because you see our demise coming around the corner. In fact, we all see the downturns to which you refer. But we also each know our own situations and know we will survive, so again, please don't go crazy being so worried about us!

"Your landlord are ass-raping you!"
The What, I'm confused. I don't have a landlord but I hope yours is treating you fairly as you're clearly worried inflation will run your limited funds out very soon.

Posted by: Biff Champion at April 24, 2008 8:13 AM

« Prospect Park Rink Plans Getting Pricier Unprotected Sunset Park Being Destroyed Bit by Bit »

April 23, 2008

Cash for Condos Grows Scarcer; Equity Lines Vanish

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