Spurred by Surfside condo collapse
Champlain Towers South Condominium, Sunrise, FL
One of the impacts of last June’s collapse of the Champlain Towers South condominium is increased scrutiny by the nation’s two big real estate mortgage backers: Fannie Mae and Freddie Mac. Both have come out with new criteria for evaluating loans for units in condominium communities. Some mortgage brokers and real estate experts say that could make it tougher to get a federally-backed loan in the future.
Fannie Mae has been using a new HOA questionnaire that became effective January 1 that scrutinizes deferred condo maintenance issues before approving loans. Freddie Mac will begin doing the same on February 28. The questionnaire applies to attached condos in communities with five or more attached units. New questions ask loan applicants about the structural integrity of the community and whether any code violations are anticipated. (You can view Fannie Mae’s Selling Guide here.)
Christina Pappas, president of the Florida Realtors®, told the Sun Sentinel that Fannie Mae has designated 400 condo buildings in Florida as ineligible for loans. The list wasn’t immediately available, but Fannie Mae does provide a list of approved condo projects that’s updated weekly. “I think ultimately what we’re seeing is if the condo is following their maintenance requirements, we haven’t seen any problem,” Pappas said in the article. “If they are in the middle of a 40-year re-certification, that is where we run into some more digging by the lender.”
What happened at Champlain Towers South, where 98 people lost their lives in the 12 story collapse, could have a big impact nationwide. Fannie Mae & Freddie Mac generally back loans for lower-to moderately-income individuals and families.
“Seventy percent of all condo loans in the U.S. are Fannie or Freddie (backed),” said Dawn Bauman, senior vice president of government affairs at the Community Associations Institute. “Sixty to 70% of all condo complexes are more than 30 years old.” Her comments are part of a very insightful article by mortgage broker Jeff Lazerson in the Daily Breeze.
LMA Newsletter of 1-31-22
