2200 Westlake is a condominium community that consists of 3 towers built in 2006 in South Lake Union/Denny Triangle. The main floor of two of the towers contains retail space and the third tower contains the Pan Pacific Hotel and a Whole Foods Market. These amenities are what make living in 2200 so fabulous and convenient including the ability to order services from the hotel such as room service. However, the amount of the commercial space is also what, in the past, has made getting a mortgage loan in this condominium very challenging.
For lending on condominiums, most banks and credit unions underwrite their loans following the guidelines determined by the federal lending institutions of Fannie Mae and Freddie Mac. One of those guidelines puts a cap on the percentage of commercial space a condominium project can have. In 2200’s case, they are 42% commercial due to the Pan Pacific Hotel, the Whole Foods as well as the hand full of other retail spaces. This will trigger the lenders to have to get an exception for this non-conforming guideline, which can be done in some cases, but it typically requires that the borrower is stellar (if not near perfect) on all of the other loan requirements such as needing to have a high credit score, low debt to income ratio and having at least 20% to 25% down payment. Which when buying a $500,000-$2,000,000 condo, is a huge chunk of money to have. This can rule out quite a few potential buyers from qualifying for a loan in this building.
What changed? Well, 2200 Westlake has received its Project Eligibility Review Service (PERS) approval from Fannie Mae. Condominium buildings that go through the lengthy process of submitting all of the required documentation for a PERS approval from Fannie are eligible for additional approval flexibility on some requirements, including having more than 25% commercial or non-residential use space as part of the condo project. Which is why, even though 2200 has a higher than accepted commercial space percentage, it still received the approval. They evaluate the condo building on it’s other merits, in lieu of just letting one item that doesn’t meet the general guidelines cause the condo project to be rejected. Once a building has the PERS approval, that approval is accepted by many lenders and their investors meaning that when your lender goes to determine if a loan is possible in 2200 Westlake, they will see that Fannie has approved it and will be able to approve the loan despite the high commercial space percentage that would have otherwise made the loan more difficult if not impossible.
2200 Westlake’s PERS approval is good through 6/12/18 (18 months), at which time another approval/extension will be needed. So, if you were thinking about selling your condominium at 2200, your potential buyer pool just got way larger. Additionally if you have wanted to buy there but couldn’t get a loan in the building in the past, now is a great time to revisit those plans. We are of course here to help so give us a shout if you’d like additional info or would like to look further at your options.
By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.