The Federal National Mortgage Association (Fannie Mae) has granted "conditional approval" to Liberty Luxe and Liberty Green, new residential condominium projects on North End Avenue at Battery Park City and has notified lenders that it will purchase mortgages for apartments in them, according to an article by Matthew Fenton today at thebroadsheetdaily.com.

Fannie Mae buys mortgages from banks and places them in securities that are sold to investors and the banks use the proceeds to grant more mortgages but can only sell the original mortgages when Fannie Mae says they meet its guidelines.

Recently, Fannie Mae has balked at backing mortgages with Battery Park City ground leases.

"Concerning the larger problem of existing Battery Park City condos where lenders appear to have stopped making loans until they receive assurances from Fannie Mae that it will accept these mortgages as consistent with its guidelines, a source familiar with ongoing discussions between real estate companies, Fannie Mae and the Battery Park City Authority, says that 'we're very close to getting approvals for three more buildings - Liberty House, Liberty Terrace and Liberty Court,'" the article said.

"This source," the article continued, "says that Fannie Mae officials have already given informal, verbal approval about a number of technical issues (such as whether each building has a sufficient reserve fund) that were the last obstacles delaying official acceptance of each of these buildings. The final, written approval for these three is expected in the next several weeks. Further progress on this issue, which should benefit all Battery Park City condos, has also recently been made in separate discussions that have focused on the ground leases each building has with the Battery Park City Authority."

The article said that "A source familiar with these discussions notes that Fannie Mae, assisted by an outside law firm that it retained for this purpose, is nearly finished reviewing all of the ground leases and is expected to issue soon a written declaration that they meet the agency's guidelines. Once released, this letter will be made available to the managing agents and boards of each condo, and can be used by condo buyers or sellers to assure a prospective lender that a mortgage is eligible for sale to Fannie Mae."

"Overall," the article said that the source explained that "they now appear to be satisfied with the leases," adding that "We're just waiting for the final sign-offs and then the problem should be resolved."