There is a major wave on changes on the horizon as the more conservative lender, IndyMac Bank starts the trend with the following:
Florida Guideline Restrictions
Transactions securing properties located in the state of Florida are subject to the following restrictions/limitations:
For all Loan Programs:
- All loans are restricted to Full Documentation
- Primary Residence transactions:
- The maximum LTV and CLTV otherwise available for the transaction type must be reduced by 5%.
- The Borrower’s current primary residence must be sold and closed prior to,
or concurrently with Indymac’s funding.
- If the to-be-secured property is a single family residence, condominium or planned unit development, it must be located within an established project. An established project is one in which 90% of the total project units have been sold, and the subject property has been previously occupied / owned by someone other than the developer. - Second Home and Investment Property transactions are limited to a maximum 60% LTV / CLTV.
Thinking of investing in Florida?
Well, you might want to speed that thought as other lenders will likely follow suit, furthering reducing access to credit for investors, at least those who don't want to shell out the 40% down payment requirements. Since cash is king and liquidity determines success, investing in Florida may be "drying up" soon.
But that is actually good news...
WHAT?!?
That's right. Home prices in Florida, especially South Florida, will start getting "priced to reality" (what I like to call it), meaning house prices are going to drop dramatically, and quickly. Once they do, the improvement in the market I have forecasted will take place. It will take some time since there is over 24 months of inventory that need to move, but hope is on the horizon.
Investors, don't fret. There will still be plenty of opportunity throughout Florida.
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