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Lenders Scrutinize Condos for Sale in Chicago Before Approving Loans

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By : John Cutts    99 or more times read
Prices of condos for sale in Chicago, Illinois, have gone down considerably in the past year; for buyers, the deals on offer have never been better. However, despite a big number of willing buyers, a lot of these properties have remained unsold because lenders are refusing to provide financing.

Just like in cases of Chicago foreclosure homes, there are certain condominium properties that lenders will not touch. Some of the reasons cited for banks' refusal to finance a condo purchase include pending lawsuit, not enough association reserves, delinquent assessments, and too many tenants or renters. According to area realtors, these are just some of the factors that lenders must consider to be able to sell the mortgage loans to Freddie Mac, Fannie Mae, or the U.S. Federal Housing Administration.

The three agencies are often the first choice of first time buyers of Illinois foreclosed homes and condo units, with the agencies combining to account for almost 90% of the secondary lending market. Real property agents reported that condo buildings are failing to meet the criteria set by lenders because their developers or owners are currently under economic distress, which results in their inability to satisfy the basic lending requirements.

Realtors stated that around two years ago, buyers of condos for sale in Chicago are practically assured of getting approved for loans. However, difficult economic times have caused condo owners to fail to meet basic requirements. They stated that most real estate brokers and agents in the metro area have learned to identify the properties that will not be approved for a loan.

A number of lenders are reportedly taking steps to improve the chances of condos and homes in foreclosure to get approved for loans. Some of them have cooperated with homeowners' associations to build up the financial reserves for a building and to limit the number of condominium units that are being converted into rentals.

Real estate analysts stated that the problem with acquiring financing for condos for sale is hindering the condominium market's recovery. A number of willing buyers have also gotten discouraged and most have reportedly resorted to being renters, abandoning their plans of buying a unit.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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