The Building – Part II: Fannie Mae Strikes Again

And I’m STILL waiting for the seller’s 2007 tax returns.

In the mean time, I’ve been working on getting my financing squared away. What a nightmare this is turning into.

Before I even finished negotiating the PA I interviewed six mortgage brokers and called around and talked to a couple of others. I settled on two, and began the process of getting a hold of the elusive “Commitment Letter”.

Now from my residential experience this seems like it should be no big deal, right? Wrong! This has actually been the most difficult and time consuming part of the process. Everyone that I presented this deal to told me that it was golden – a solid building with no deferred maintenance, good rental area NOT in the city of Detroit, strong rental history, and excellent debt coverage ratios. I have a ton of experience with rental properties, great credit and cash reserves, so this should have been the proverbial slam dunk.

Exactly what I was looking for in my first building. A slam dunk. Not only that, a slam dunk with upside potential.

But alas, this is Michigan. Land of the subprime meltdown, 50,000 foreclosures, and a do-nothing, know-nothing government.

So right when I was about to get my “get out of jail free” card in the form of a commitment letter, the rules changed. Fannie Mae (see my related post here http://dennisfassett.com/2008/05/09/too-little-too-late-a-friday-afternoon-rant/) decided in their infinite wisdom to downgrade Michigan to it’s third tier of risk. I know now that this is a “bad” thing.

And just like that – no more 80% LTV loans for commercial properties in Michigan. Brilliant. And again, too little, too late. This was two weeks ago.

Now my intrepid team of competing commercial mortgage brokers tell me – No Problem! – a 75% LTV is a slam dunk. 

And still I wait. Is there a Commitment Letter in my future? At his point I think that only God knows. Only time will tell.

Stay tuned for The Building – Part III: The Inspection. You won’t want to miss it.