Wells Fargo No Longer Loves Condos

Wells Fargo is pulling out of condo lending
Wells Fargo is pulling out of condo lending

Wells Fargo, once the Hercules of condominium mortgage lending, is now apparently running from that faster than a runaway stagecoach. This is not good news for buyers who already find it tough, if not impossible, to obtain financing for condominiums. And not only condos are in trouble: Wells-Fargo apparently adopted a "just say no" policy in late February for any residential subdivisions, including homes, that share property insurance companies, as they commonly do.

California-based real estate attorney Christopher Hanson says that what Wells is doing smells of discriminatory practice. After all, we all know what kind of shape the condo market is in.

The bank, however, is blaming its behavior on an interpretation of 2008 Fannie Mae guidelines. The guidelines prohibit lenders from selling loans to Fannie if the condo's Home Owner's Association insurance is issued by a carrier that covers multiple unaffiliated condo associations or projects.

"FNMA has told us not to accept (insurance) policies like this one," Wells-Fargo representative Shane Copper-Wilson told Hanson. "The current direction from agency and credit policy is that they are unacceptable."