Will new underwriting guidelines by FHA, Fannie Mae, and Freddie Mac affect real estate development in the Jackson metro area? It's not a hypothetical question as Yahoo News reported FHA is tightening its underwriting guidelines for condos and mixed-use developments:
"The Federal Housing Administration is getting ready to implement new rules that could, in some cases, make it harder to get a mortgage to buy a condominium unit.
The new rules were supposed to take effect Oct. 1. But the FHA announced in mid-September that it would delay implementation of the new rules until Nov. 2, and that it might modify some of the policies.
Of the several new rules and requirements, there are four that most directly affect people who want to buy condos with FHA-insured mortgages:
* "Spot approvals" are eliminated, and now the entire project has to meet FHA approval before a borrower can get an FHA-insured loan.
* A maximum of 30 percent of the condo project's units can have FHA-insured mortgages (there was no such limitation previously).
* Before the FHA will insure a mortgage on a condo, at least half the units must have already been sold (again, there was no such limitation previously).
* At least half of the condo project's property owners will have to occupy their units, down from 51 percent..."
Unfortunately there are even more severe restrictions which could further crimp the sale of condos and apartments. FHA stated in Mortgagee Letter 2009-19 the following guidelines would take place October 1 (Now November 2, See section V of letter):
"No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogeneous with residential use, which is free of adverse conditions to the occupants of the individual condominium units."
"No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units."
FHA financing now accounts for nearly half of all mortgages underwritten. FHA requires less money down (3.5%) than do conventional loans but has a maximum loan limit of $271,000 in Mississippi. The appraisal process and credit score requirements are somewhat less stringent as well. While Fannie Mae issues mortgages up to $417,000, it requires higher credit scores and tightened its guidelines earlier this year. The Wall Street Journal reported in May:
"The government-backed mortgage-finance company stopped guaranteeing mortgages in condo buildings where fewer than 70% of the units have been sold, up from 51%....
Fannie and Freddie are both set to increase fees on condo buyers next month. Buyers without at least a 25% down payment will have to pay closing-cost fees equal to 0.75% of their loan, regardless of the borrower's credit score. The companies say these fees are necessary to protect against higher default rates....." article
Condo projects nationwide have burned lenders with much higher default rates and plummeting market values. These new guidelines will severely impact new mixed-used projects as developers will be faced with the twin prospect of overcoming the hurdles of the 25% mixed-use rule and 10% ownership limit. Prospective homebuyers can get a loan through local banks that can service the loans themselves, however, such loans usually carry higher down payment requirements, shorter terms, and higher credit scores.
The obvious question is whether the new regulations will affect projects such as the King Edward Hotel. Ben Allen, the President of Downtown Jackson Partners, told JJ most of the "downtown" projects should avoid the negative impact of the restrictions. Mr. Allen said projects such as the King Edward Hotel and Standard Life building used historical tax credits as part of their financing. In order to qualify for the tax credits, these mixed-used projects must rent out the residential units for seven years before they can sell them to qualified buyers. Mr. Allen said purely residential projects did not qualify for said tax credits. These projects and others such as Mandalay, the $35 million, 360 unit condominium development slated for the old Rapids on the Reservoir site, are probably going to find it more difficult to find qualified buyers after the new rules are implemented. While downtown will probably escape the latest credit ax, other projects in the Jackson area will probably not be so lucky.
Note: Article written by financial blogger "Mish" Shedlock on how the new rules are going to render condos in other markets worthless.
Friday, October 16, 2009
Will new rules on condos affect Downtown?
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Trollfest '09
Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.
Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).
Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.
Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".
In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.
In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.
Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.
Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!
This is definitely a Beaver production.
Note: Security provided by INS.
Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).
Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.
Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".
In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.
In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.
Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.
Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!
This is definitely a Beaver production.
Note: Security provided by INS.
Trollfest '07
Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.
There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.
If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!
This is definitely a Beaver production.
Note: Security provided by INS.
There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.
If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!
This is definitely a Beaver production.
Note: Security provided by INS.
8 comments:
That is a broad statement KF that 'downtown' will probably escape based on the historical tax credits used in the (only) two building examples provided. Don't see how the Cap Green project is going to be exempt. Do you have a personal animosity about the Mandalay project or is that project something the yearbook salesman stuck into your craw?
Downtown Jackson needs residents in order to drive its recovery. You simply cannot revitalize an area if it's only occupied from 8 to 5. That's happening & it's good to see.
However, I still question the size of the market for downtown residences, given everything that is wrong with Jackson (specifically the downtown-bordering-on-west-Jackson area). I can't help but think that these mortgage changes will be a convenient excuse if the downtown developments have significant vacancies.
There is money in the metro area. Make downtown Jackson an attractive place to live - more appealing than the neighboring areas with which it competes for residents - and people will move there.
What's happening with Mandalay, anyway? Is it another Harborwalk?
I qualified that statement by stating those that use historical tax credits will escape that fate. Probably. I used Mandolay as an example of a mixed-use or condo project that was not in downtown Jackson. Nothing about the list of projects mentioned was meant to be exclusive, they were used as examples only.
Bring Back the DOCK!
Hey 11:08, did you know you can go to Pelican Cove and have a good ole fashioned Dock Rocker?! Same thing but called a Pink Pelican. I found enjoying one by the rez one afternoon to be a nostalgic experience. . So it's KINDA like being at The Dock. ;)
I just miss pulling up to the dock on the pontoon, hanging with friends and just, well, the dock experience. It was fun while it lasted. Also PC is a bit difficult to pull up to...I have heard good things about PC though. Thanks.
It is my understanding that the Mandalay project will be a FHA 221(d)4 Apartment project
Implementation of FHA’s new policy guidance for condominium project approval and condo unit financing will be delayed until December 7th 2009. The new guidance, to be issued within the next two weeks, will: 1) offer additional leniencies to address the difficult market conditions and 2) augment some portions of FHA Mortgagee Letter 2009-19, providing additional information and clarification.
Until the new guidance takes effect on December 7th, 2009 lenders may continue to use the Spot Loan Approval guidance issued in Mortgagee Letter 1996-41.
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