Steamboat Condo Financing Issues from WMRA

New Fannie Mae guidelines for condominium financing is preventing buyers in all resort markets, not just Steamboat Springs, who want to take advantage of the lowest prices and lowest interest rates in years from buying a Steamboat condos.

Here is an abridged version of the Western Mountain Resort Alliance position paper explaining these challenges. The WMRA includes 13 ski areas, all of which are experiencing the same lending issues:


The Western Mountain Resort Alliance (WMRA) is composed of boards of REALTORS┬« of destination ski resorts in the Mountain West including:  Park City, Utah; Sun Valley and McCall in Idaho; Jackson Hole, Wyoming; Crested Butte, Steamboat Springs, Summit County, Vail, Winter Park and Telluride in Colorado; Tahoe, California; Big Sky, Montana; and Whistler/Blackcombe in British Columbia, Canada. We are committed to the marketing and selling of resort real estate and protecting the benefits our owners of vacation real estate enjoy.

The Issue

Our membership is becoming increasingly concerned about the difficulty of obtaining financing in condominium transactions in our resort areas due to strict Fannie Mae & Freddie Mac condo guidelines. The condo markets in our areas have been particularly hard hit by the housing downturn. The current guidelines have made it almost impossible for condo transactions to be completed, even for buyers with strong credit and healthy down payments.

REALTORS® in our resort areas are seeing:

  • A record decrease in sales of condominiums where financing is required by buyers, due to inability to meet GSE requirements. Condo’s are a very large part of resort real estate sales.
  • Reaction by HOA’s, who are changing original doc’s to disallow short term rentals completely so that financing can be obtained. This is backfiring, or will, when investment buyers will not seek properties in these HOA’s, because they cannot be rented.
  • Conflict between federal agency requirements: Fannie recently denied approval of a condo project solely because the project included a few ADA units as required by the Americans With Disabilities Act. These units were intended for owners with guests who needed ADA compliant property. Fannie denied the project, indicating the ADA units were a “non-incidental business use”. The lending agency was concerned these units would be rented out as a nightly rental.
  • First Time Homebuyer Tax Credit and Condo Purchases. Many “locals” are trying to secure the first time homebuyers tax credit and these condos are the only units that fit within their price parameters.
  • Few Foreclosures. Our resort markets are holding strong against foreclosures. Loans in resort condo markets perform better than traditional housing loans and resort areas are not seeing more than 2% foreclosure rate. GSE’s are concerned about foreclosure, as it relates to the entire U.S. Housing Market. FHFA needs to differentiate resort condo markets from traditional lending markets.

WMRA has identified these lending issues and requirements to be the nexus of problematic condo financing:

  • FNMA and FHLMC/ large bank regulations that:
  • Require 70% owner occupancy.
  • Do not allow nightly rentals of condos.
  • Do not allow front desks.
  • Allow underwriters to do a web-based internet search to determine whether project engages in nightly rentals. These searches can include inaccurate or dated information that are not verified.
  • Restrict lending for projects that do not have individual gas or electric meters or services.
  • Do not allow lending in projects where “lodge” is included in the name.
  • Require 40-50% down payment.
  • Overlays put on by large banks selling to FNMA and FHLMC.
  • Denial: One of the biggest issues is when the denial occurs. It is generally within the week of closing and often 1 day prior to closing. This means that the Seller has taken the condo off the market for 45 days, the buyer is out the cost of an appraisal and an inspection. Also lost is the paperwork, time and energy expended by all parties involved. If the underwriters are going to “google” the property, this should be done at the beginning of the process.
  • No Appeals Process. There was recently an issue with a project consisting of 100 units, 5 of which are in a short term rental program. Many of these units are townhomes but registered at the County as Quail Run Condos. This is a project that consists of primary housing for many of the core service and hospitality families needed in our resort. Due to the 5 short term rentals and the fact that they found this on a web page, funding was denied. Again, no appeal on this clearly errant decision.
  • Lack of definition as to what can and what cannot qualify. This creates confusion for lenders, REALTORS┬« and the public at large. We need clear and concise definitions on qualifications.


It’s a self-fulfilling prophecy: The GSE’s don’t want to lend for fear of foreclosure, but if they don’t lend, and sellers in these condos can’t sell their properties, they will foreclose.



The Goal

With the goal of achieving liquidity in our condo markets, WMRA strongly urges NAR to pursue public policy, whether through federal legislation or regulatory changes, that would exempt resort areas nationwide from the current GSE condo guidelines.

In January, Fannie Mae undertook a “Special Approval” designation that exempts established condo projects in Florida to help stabilize the states condo market. We believe resort markets in all areas of the United States should be exempted from rules that prevent sales of condominiums in our area.