A mortgage lender is exiting the Florida condominium market
California based Supplier Funding Associates LLC On Friday, the broker told his partners that he was withdrawing from the housing loan.
In an email sent Friday morning, Provident said it will “no longer accept new applications” effective that day. Provident told its partners that all loans in the pipeline must close by 11:59 p.m. PST on October 31 or they will be declined. In addition, all currently locked loans must be funded by the lock expiration date.
“We look forward to continuing to deliver our aggressive pricing and fast turnaround times to our partners for all other products we offer,” the company said in an email reviewed by HousingWire.
Messages left with Provident were not immediately returned Friday.
The Pica family-run Provident is known for its conservative approach in the industry and better-than-average delinquency across its portfolio of services, so its exit from such a turbulent space is not a big surprise.
“I am not surprised. Air conditioners are difficult. Apartments in Florida should be next level,” he said. “We have an investor who won't make a deal in Florida or near major bodies of water.”
A combination of rising insurance rates and condo association reserves and new building maintenance regulations have created an increase in condo inventory in Florida. In particular, it created a glut of 30-plus-year-old units on the market with few buyers.
The median listing price for a condo last week was $505,000, down from a peak of $620,000 on July 1, 2022, according to the report. Inventory is also rising — up to about 10,000 units last week, a sharp increase from about 6,300. a year ago.
After the 2021 Surfside condo collapse that killed 98 people, Florida lawmakers passed a law requiring condo associations to modernize buildings that had been holding back critical work for years.
The law also requires buildings to complete a structural integrity backup study that will estimate how much work needs to be done. The partners will then request a special assessment from owners, which in some buildings can reach six figures per owner.
Some owners of older condos have had to list prices because special assessments are too high (and difficult to finance). In relation to Fannie Mae and Freddie Mac It has blacklisted a number of condominium buildings in South Florida where it will not repay the loans.
One Florida mortgage broker said the Provident exit gave him “a sense that we're going to see other big lenders exiting the condominium market in Florida. This can result in local community banks and credit unions providing financing that is likely to have a maximum loan-to-value ratio of 80% or less.
Some agents believe the boom in Florida's condo market isn't all bad news.
“Condos that can be more fiscally responsible or proactive with renovations are condos that people feel really comfortable buying at a time when most people don't think the risk is worth it,” says the Seminole-based agent. Future Home Realtytold HousingWire in July. “I expect the biggest problems in the future will be with the older condo stock, because many people now only want to look at new complexes.”
