That’s because some major lenders have strict rules about the properties their borrowers can buy into. For instance, Fannie Mae, and to some extent, Freddie Mac, probably won’t give you a mortgage if the condo you want is in a building with a lot of commercial space. You’ll also be declined if too many of the property’s units are held by one entity.

So say you’re shopping for a condo and find an awesome deal at a newly constructed building where the developer, in order to sell units in this tough market, has cut prices. In the example given in the article, Fannie declined one borrower’s mortgage application because the sponsor still owned about a quarter of the units. That borrower was able to get a waiver after Fannie did a deeper examination of the building’s finances, but it took some time. In another instance, one borrower was declined a refinance because commercial tenants occupied 40% of the building. That borrower is currently going through an appeals process.

It’s a little bit of a Catch-22, isn’t it? The developer is trying its best to sell the condos in its building. Buyers can’t get mortgages because the sponsor still owns too many units. If buyers have no funds, there’s no one to buy the units, leaving them in the developer’s hands.

Oy.

Fannie Mae maintains its policies are flexible, and in most cases, borrowers do eventually get approved after a long process and piles of paperwork. Still, the homebuying process, especially for first-time buyers, is a daunting one as it is.

It’s also a bit concerning that folks shopping for a condo in one of the biggest markets in the country would face such challenges, especially in today’s environment. Methinks some parties (((cough, lenders, cough))) aren’t doing all they can to “help solve the nation’s housing problems.” Sure, a lax attitude toward the mortgage approval process played a major role in bringing us into this mess, but I think that, in some cases, it wouldn’t hurt to ease up on policy.

At the same time, both GSEs in the past few days have reported substantial first-quarter losses due to continued weakness in the market. Freddie Mac posted a $6.7-billion net loss, up $2 billion from the prior quarter and down from $10 billion the same period a year ago. Fannie Mae’s first-quarter loss came in at $11.5 billion, down from $15.2 billion in the final three months of 2009 and $23.2 billion in the first quarter. The losses were attributed to credit-related expenses and the impact of new accounting standards.

These losses resulted in a net worth deficit of $10.5 billion for Freddie and $8.4 billion for Fannie, for which the companies requested a combined $19 billion in additional funding from the Treasury in order to continue operations. If accepted, that would bring the GSEs’ total federal bailout to some $140 billion.

The good news for multifamily, though, is that the agencies’ losses were primarily on the single-family and guarantee segments of their business. On the multifamily end, Freddie earned $221 million in the first quarter and Fannie earned $99 million. Those figures are minuscule in comparison to the billion in losses, but they’re better than nothing.

Another bright spot is that the delinquency rate for both firms. Freddie’s monthly delinquency rate fell for the first time in three years, to 4.13% in March (down from 4.2% in February) for single-family homes and 0.24% for multifamily, down one basis point from February. Meanwhile, Fannie’s serious delinquency rate (that is, loans that were more than 90 days late) rose from 5.38% in the final quarter of 2009 to 5.47% in Q1. Although it registered an increase, Fannie officials said the figures show a slowing growth rate of delinquencies.

The improvement reflects the willingness of lenders to do workouts with borrowers, but with the continued weakness in the economy and the number of underwater mortgages out there growing, I don’t see how this could be a long-lasting trend.

It’s safe to say Congress is stuck between a rock and a hard place. On one hand, the mortgage giants played a large role in the housing market’s downturn and the bailouts, which have been sharply criticized, seem to be growing. On the other hand, it’s no question that financial support from both Fannie and Freddie is also the primary—if not sole—reason the housing market hasn’t completely imploded.

A local resident filed the suit, alleging that an affordable housing development above a church violated the separation of church and state. Bozzuto Development is building the Views at Clarendon, consisting of eight floors of primarily subsidized housing for low- and moderate-income tenants above a new church sanctuary and child-development center. The church, seeking to renovate its sanctuary, sold the air rights for $5.6 million to a nonprofit group that’s building the apartments. Some $48 million in county and state loans and tax credits is helping finance the project.

The first amendment challenge brought on by the resident, Peter Glassman, claimed that taxpayer money was being used to fund the church renovation and is “enriching a religious institution.” According to local reports, Glassman claimed the subsidy for each apartment was excessive, that the church received more than market value for its air rights, that the shared lobby, entrance and other brick-and-mortar elements would entangle the church and the subsidized housing,” and that entanglement was furthered by the amount of church members on the nonprofit board.

Glassman lost the suit due to a lack of proof, though he stated his intention to appeal the decision. The multifamily units are slated to open at the end of 2011.

Though in this case the first amendment challenge seems to be another tactic used by NIMBY-ists to block an affordable housing project—after all, local residents tried to block the project a few years ago on zoning grounds—it does bring to surface certain questions about public/private partnerships like this. How fine is the line between church and state when the private partner is a religious institution?

The intent, stated Freddie Mac Multifamily SVP Mike May, is to reduce the number of properties that may go into default or foreclosure, or go through a drawn-out workout process.

Here’s how it works: Freddie would originate a first mortgage with a fixed rate and an LTV of up to 75%, with the mezz lender providing another 15% maximum at either or fixed or floating rate. Freddie would then buy the eligible senior loans from the seller/servicers and either keep them on their books or securitize them. The mezz debt won’t be backed by the property, but rather, the borrower’s equity—reducing the risk to Freddie. The mezz lender can also bid on the b-piece of the securitized first mortgage.

Will this new program have its intended effect? I think so. After all, Freddie Mac and its larger cousin, Fannie Mae, have become the go-to—and, in some cases, the only—sources for apartment financing these days. With so few players operating in the financing arena, let alone experienced, reliable ones, why not go to the source you’re comfortable with? I’m pretty certain we’ll be seeing a slew of Freddie Mac refinancings over the next several quarters.

But the move does bring up some thoughts. For instance, does this somewhat increase the risk Freddie is taking on, especially given the uncertainty and stagnation in the market? What about the terms—will they be competitive, or should borrowers expect to see more cautious figures on this mezz debt? Will this just prolong the downturn by dragging down the inevitable write-downs property owners must take? And how does it impact the dynamics of the property markets, since similar product isn’t available for asset classes outside of multifamily?

As explained in a recent article in the New York Times, several areas, including—surprisingly—New York City, have laws against allowing more than three unrelated people sharing a residence. Though these laws aren’t strictly enforced—or rather, are rarely enforced—it may still be a concern for landlords.

Say these laws are enforced. Who would be held responsible? The landlord? The tenants? The apartment manager? What would happen to rental rates? And how about apartments in college towns, where it’s not unheard of to have several people living in a single unit.

If you’re an apartment owner or manager, are cohabitation laws a top-of-mind concern? Are there ways to get around them? Has anyone had to deal with these issues in reality? Are they a detriment to muiltifamily owners and operators? Or do these laws make sense?