One mortgage lender is exiting the Florida condo market
Based in California Providential Financing Partners LLC is exiting the condo lending industry in Florida, it told brokerage partners on Friday.
In an email sent Friday morning, Provident said it would “no longer accept new applications for condominiums” starting that day. Provident told broker partners that all loans in the pipeline must be locked by 11:59 PM PST on October 31 or they will be denied. In addition, all currently locked loans must be funded before the lock expiration date.
“We look forward to continuing to offer our partners our aggressive pricing and fast turnaround times on all other products we offer,” the company said in the email, which was reviewed by HousingWire.
Messages left with Provident were not immediately returned Friday.
Provident, run by the Pica family, is known in the industry for its conservative approach and has an above-average number of defaults in its services portfolio. So it might not be a big surprise that the company would exit such a turbulent market.
“I’m not surprised. Condos are hard. Florida apartments need to be next level,” said a private lending executive. “We have an investor who doesn’t want to do deals in Florida or near large bodies of water.”
A combination of rising insurance rates and new regulations surrounding condo association reserves and building maintenance has led to a surge in condo inventory in Florida. In particular, it has created a glut of units over 30 years old on the market, with few takers.
According to Altos Research, the average list price for a Miami-Dade County condo was $505,000 last week, down from a peak of $620,000 on July 1, 2022. Inventory has also soared — last week it reached nearly 10,000 units, a competitive price. rising from about 6,300 a year ago.
After the 2021 Surfside condo collapse that killed 98 people, Florida lawmakers passed the Condo Safety Act, which required condo associations to update buildings that had delayed critical work for years.
The law also requires buildings to complete a structural integrity reserve study, which assesses how much work needs to be done. Partners will then have to levy a special assessment on the owners, which in some buildings can amount to as much as six figures per owner.
Some owners of older apartments have had to quote prices far below what they bought the units for because special assessments are so high (and difficult to finance). , Fannie Mae And Freddie Mac has blacklisted a number of condominiums in South Florida for which it will not lend.
A Florida mortgage broker said the exit from Provident made him “feel like other major lenders were leaving the Florida condominium market. This could result in local community banks and credit unions providing the financing, likely with a maximum loan-to-value ratio of 80% or less.”
Some agents believe the turmoil in Florida’s condo market isn’t all bad news.
“The apartments that were perhaps more financially responsible or proactive with repairs, those are the apartments that people really feel comfortable buying at a time when many feel like the risk may not be worth it,” Cyndee Haydona Seminole-based agent for Future residential real estatetold HousingWire in July. “I expect that the biggest challenges in the future will be with the older apartment stock, because many people now only want to look at newer complexes.”
