EXPU - Expert Group, Inc. Implements New FHA Condo Lending in South Florida
MIAMI, FL--(Marketwire - June 30, 2009) - Expert Group, Inc. (PINKSHEETS: EXPU) is pleased to announce the great news coming from FHA about FHA Condo loans. As we already know, South Florida is one of the largest markets for condominiums in the U.S.A. As of this week, there are a combined 49,746 condos and town houses on the resale market in the tri-county South Florida region, stretching from West Palm Beach to downtown Miami. That's down from 51,581 about a month ago.
The approval from the Federal Housing Administration, means potential buyers can more easily qualify for a low-down-payment mortgage backed by the FHA -- a highly coveted amenity in this era of tight credit.
Typically, it can take months for the FHA to approve a mortgage on a condo, Fannie Mae and Freddie Mac, the government-controlled mortgage companies, have put in place even tighter guidelines for making condo mortgages. And without government backing, private lenders that offer mortgages for condos require large down payments of 30% or more. But if a building has FHA approval, the borrower can get a mortgage in as little as two weeks. In addition, the buyer can get a down payment as low as 3.5%. (The FHA doesn't make loans but insures lenders against losses on those loans.)
The FHA's growing appeal among developers represents a drastic turnaround from just a few years ago, when condos sold so quickly that few developers bothered with the FHA's time-consuming application process. These days, however, condos are the weakest segment of the housing market. Condo sales in April fell 12.5% from a year ago, compared with a 3.6% decline in sales for single-family homes, according to the National Association of Realtors.
At the end of April, the U.S. had enough condos to absorb 15 months of demand, according to the National Association of Realtors.
In order for mortgage to be eligible for backing, the FHA requires 51% of units to be sold. While Fannie and Freddie have boosted their requirement to 70%, an FHA official said the agency is open to lowering its threshold out of concern that tighter financing could push the sector into a downward spiral.
More buildings also are eligible for FHA approval after Congress last year boosted loan limits to $417,000 across the country and as high as $729,750 in the most expensive markets. About one-third of all first mortgages are now being originated through the FHA, up from about 2% in 2006. Much of that share has come in markets that were previously shut out by lower loan limits.
Condo buyers also are finding FHA loans may be more affordable, particularly for borrowers with lower credit scores or smaller down payments. In April, Fannie and Freddie began requiring condo buyers without a 25% down payment to pay closing-cost fees equal to 0.75% of their loans, regardless of the borrower's credit score. The FHA, by contrast, doesn't charge higher rates on borrowers who make smaller down payments.
Robert Rico states, "This is huge news for Expert Financing. South Florida is one of the biggest condo markets in the country. We now can market to this multi million dollar Market in our back yard. For the last 2 years, our business has been mainly single family and commercial. We have shied away from condos to do the heavy regulation from our lenders. We will begin immediately a marketing campaign throughout South Florida."
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