Blog :: 06-2008

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Killington Condo Financing Challenging

It seems that the pendulum has swung completely in the other direction.  None of us who are even just slightly tuned in to the news can avoid hearing about the "mortgage crisis" that many in the US are facing.  The truth of the matter, however, is that the "overlending" (i.e., lending money to people with "borderline" ability to pay) which created the problem initially wasn't done in Killington.  In fact, there is only one foreclosure in the Killington market that I am currently aware of.  The "fix", however, whereby lenders have tightened lending standards like a noose are being applied universally, including to the Killington market.

About a week ago, we were told that Fannie Mae and Freddie Mac would not finance a condominium purchase in Killington.  The problem initially seemed to focus on the properties being considered "investment" properties, not second homes.  Another issue seemed to center around requiring added protections for mortgagees and guarantors.  These safeguards involved making changes to condominium documents which is not an easy process.  Thirdly, there seems to be an issue financing a property that has extensive commercial activities such as restaurants and health clubs.  It seems that new "issues" seem to be identified daily.

There is a meeting of representatives of the Boards of many of the Killington condominium associations on Saturday, June 7th.  The difficulty in financing condominium purchases is a major topic for discussion on the meeting agenda.  Two attorneys, familiar with the Killington condominium documents, have been asked to review the new lending requirements and summarize recommendations for the attendees.  These recommendations will then be reviewed by the Association Boards which may, in turn, recommend amendments to the existing condominium documents.  I just hope that if these changes are made, new requirements don't emerge, necessitating more changes. 

This all seems so unnecessary.  Had lenders used reasonable and judicious qualification standards to begin with, we would not be in this predicament.  In addition, these requirements are being applied across the board whether or not a local problem exists.  The "pendulum" has swung to the other extreme.  Let's just hope that it doesn't take long to reach a point of sanity and equilibrium!

What do you think?