The Florida Death Spiral

The AP reports: New condo loan rules could hurt distressed areas.

Money is already tight at The Wilshire Condominium, and new lending rules threaten to make life even more difficult for it and other condos around the country.

Arthur Barr, a board member of the Wilshire homeowners association, estimates 30 percent of the owners in the 378-unit building in North Miami Beach are behind on their fees. That makes it difficult to pay for things like elevator repairs and gardening.

Now, Fannie Mae — the biggest player in the mortgage market — wants to ensure that if it's backing a loan for a condominium, the building is in good shape. If the building is brand new, Fannie Mae wants to be certain there are enough owners to pay for maintenance and preserve the value of the property.

Under the new regulations, Fannie Mae will reject any mortgage for a condo buyer if more than 15 percent of the other owners are delinquent on their association fees. What's more, Fannie Mae will only guarantee mortgages in new or newly converted condo developments if 70 percent of the units are sold or under contract.

They're toasted. They have, what? A fourteen-year supply of condos assuming "normal" growth.

Ooh, Florida! Ooh, Florida!
How fucked are you, good Florida!