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Council discusses regional outreach on condominium financing barriers tied to Fannie Mae and Freddie Mac rules
Summary
Councilors noted that Fannie Mae/Freddie Mac underwriting rules requiring substantial presales for new condominium projects (commonly ~50%) create a financing barrier that favors rentals over for-sale condos; they suggested convening regional managers, bankers and state officials to explore solutions.
Councilor Andrew raised a regional financing problem that constrains condominium construction: construction lenders and secondary-market underwriters (Fannie Mae and Freddie Mac) often require significant pre-sales (commonly about 50% of units) before buyers can obtain conventional mortgage financing on new condo projects, making lenders reluctant to provide construction loans. "Fannie Mae and Freddie Mac have a rule that a homeowner who wants to buy a condo can't get a mortgage on a new condo unless that condominium is already presold, presold before construction, 50% of the units," Andrew said, noting the consequence is that many builders prefer rental product over for-sale condos.
Councilors suggested regional coordination: convene Chittenden County managers, the state treasurer or banking participants, and local commercial banks to explore whether state-level or local financing mechanisms (or advocacy to federal entities) could reduce the presale barrier. Several councilors noted housing affordability and homeownership pathways as key motivations for tackling the issue.
