Charlotte Condo Sellers Face New Fannie Mae Hurdle

CHARLOTTE, N.C. – Starting Aug. 3, Fannie Mae and Freddie Mac will stop accepting abbreviated condominium reviews. The change eliminates the Limited Review and Streamlined Review options that let qualified borrowers, especially those with larger down payments, skip a full project evaluation. Lenders now must examine the condominium association's finances, insurance, reserves, pending litigation, special assessments, delinquency rates and structural condition before approving a loan.

Matt Stone, founder of Stone Realty Group, said the new rules arrive as Charlotte's condo market is already softening.

June data from Canopy MLS shows Uptown Charlotte inventory rose 34.6% year over year, to 140 properties from 104. Months of supply jumped 57.1%, to 8.8 months from 5.6. Closed sales fell 51.9%, and the median sales price dropped 17.9%, from $420,000 to $345,000. Average days on market stretched from 32 to 96.

Year to date, new listings are up 18.4%. Pending sales are down 9.8%. Closed sales are down 10.3%.

"The condo market was already experiencing rising inventory, longer selling times and price pressure," Stone said. "Adding more financing friction could become a double whammy for sellers. Some buildings may take longer to approve, some transactions may require additional conditions and certain projects could have difficulty qualifying for conventional financing altogether."

Stone said buyers who prepare for the new process could find an opening.

"We may be entering one of the strongest condo negotiating environments Charlotte has seen in years," he said. "That does not mean every condo is a bargain. Buyers need to look beyond the unit and understand the association's reserves, insurance, maintenance history, assessments and financing position. The right purchase could be an excellent opportunity. The wrong building could create expensive problems later."