Condo Owners Up a Creek
The Register informs us today of a bit of fallout from the late great Grand Educational Mortgage Banking and Housing Explosion, illustrated at the right.
Where was I? Oh. I remember now.
It seems that when Regency Homes, you know, those wild and crazy guys who were the biggest home builders in Iowa until they exploded in 2008 went bust, a number of the properties they owned were foreclosed on and repossessed by the banks.
One of these was a condominium project in Johnston known quaintly as Providence Pointe. The Two Rivers Bank, which repoed the project, sold it off to Haverkamp Properties, which promptly turned the project into apartments, seeing as condominiums aren't selling very well.
The only people left were 12 owners in two buildings, and thereby hangs the Problem. Although these folks would like to refinance and obtain the benefit of very attractive 30 year interest mortgage rates-currently below 5 per cent this morning-but in the interim Fannie Mae changed its regulations concerning condominium mortgages to allow for writing mortgages only if 70 per cent of the units in a condominium project were owned or under contract.
The takehome from this is that the owners can't get refinanced because the project is now a mere apartment complex.
They're suing the Two Rivers Bank, alleging that the bank should have known that selling the property to one individual would cause problems for the existing owners-don't expect an answer anytime soon.