Condo deals die in shadows of financially distressed buildings

The Chicago Tribune reports:

Condo buyers who sat out last year's real estate market, waiting for prices to bottom or their own financial footing to improve, find themselves in an enviable situation.

Prices have plunged, and mortgage interest rates, while slowly rising, remain near 5 percent, creating the best home affordability in decades for consumers who qualify for loans.

There's just one problem. It's not just the borrower who has to be up to snuff, it's the building, too, and in the Chicago area there are plenty of buildings that lenders won't touch.

Among the deal killers: too many renters in a building, pending litigation, inadequate association reserves and delinquent assessments. Those are some of the criteria lenders must look at in order to sell the loan to Fannie Mae or Freddie Mac, the troubled, government-sponsored entities, and the Federal Housing Administration, the first choice for many first-time homebuyers. Combined, the three agencies account for about 90 percent of the secondary loan market.

Great moments in real estate.