It hasn’t put the brakes on closings, but it certainly changed from a green light to a yellow light. It’s not a red light, but without Fannie Mae approval and a stable of portfolio lenders that are easily obtainable, it has definitely slowed down the process.
– From a source close to Magellan Development regarding Fannie Mae‘s classification of Aqua’s 474 apartments as commercial property, which, along with its still-empty hotel component, raises the development’s non-residential-to-residential ratio above what Fannie Mae’s guidelines permit.
This has kept a lot of buyers away from the closing table in recent months. According to Redfin‘s MLS data and Cook County sales records, 11 homes have closed at Aqua since mid-September. Understand that this number represents the minimum homes that have sold — there is a lag of a few weeks in the Tribune’s Cook County records search, so it’s possible that units that were never listed on the MLS have closed since mid-October but have not made their way into the paper’s database.
In the meantime, Magellan is putting together a list of portfolio lenders who will be able to give buyers 80-percent loans. These lenders should be ready to go starting next week, meaning we should see an uptick in closings at the tower very soon.
Obviously, Magellan views Aqua’s apartments as residential units and plans to reapply for Fannie Mae approval, but the developer believes it has a better chance for reconsideration after it has resolved its hotel situation. No word yet on how much longer that will take.
We should tip our hat to the crew at the SkyscraperPage forum, who started discussing this issue earlier in the week.
Have you heard of any other developments that have had trouble with closings lately?