Condo developers get into lending game

Editor's note: This article is reposted with permission by The Real Deal. Click here to view the original article.

By LUIS F. PEREZ

With mortgages hard to come by, some developers are lending the money to buyers themselves in order to sell units.

"It just reflects the fact that it's not easy to get financing for a condo unit," said Guy Cecala, CEO and publisher of the Maryland-based Inside Mortgage Finance Publications, a group of industry newsletters.

"They're the black sheep of the mortgage market."

That's especially true in South Florida, where it's ground zero for the condo market crash, he said. Since the peak of the boom years in 2006, condo prices have dropped around 50 percent, according to real estate tracking company Zillow.com.

So condo projects like the Luxuria in Boca Raton, 1200 Hillsboro Mile, which is just south of Boca Raton in Hillsboro Beach, and the 1800 Club in Miami, a 42-story luxury condo in the Miami Performing Arts District, are finding alternatives to the traditional mortgage market.

"People like options," said Michael Goldstein, Luxuria's president of sales and marketing.

"It doesn't matter how much money you have."

At Luxuria -- where units range from $4.5 million to $15 million -- the developer financing program started last month with an advertisement in the Wall Street Journal, Goldstein said.

While it's too soon to gauge the success of the new offering, so far, the developer is working with one buyer through that program.

It's not your traditional mortgage. The developer requires a larger down payment of 50 percent, a credit check and the loans are only for two years. It's designed for an owner who may be downsizing and has to sell a home. ...CONTINUED

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