– In an October 13, 2021 letter from the Federal National Mortgage Association, a.k.a. “Fannie Mae,” to all single-family sellers, they outline new temporary loan eligibility requirements for condominium and co-op projects. The letter comes largely in response to the tragic collapse of the Champlain South Tower in Surfside, Florida in June of 2021 that cost 98 people their lives and caused the destruction of 136 homes.
Condominium boards and management companies of condominium buildings should be aware that these new requirements could have a significant impact on condominium owners’ ability to sell their units.
The new loan eligibility requirements set forth by Fannie Mae go into effect on January 1, 2022 and stay in effect until further notice. They include:
- stricter eligibility review requirements for any condominium or co-op project that has issued or is planning to issue a special assessment to address deferred maintenance items that impact the safety, soundness, structural integrity, or habitability of a condominium or co-op
- strengthened lender requirements for review of condominium and co-op project reserves
- reminders that appraisals on units in condominium and co-op projects must document any special assessments or deferred maintenance that may impact the safety, soundness, structural integrity, or habitability of a condominium or co-op unit or the overall project and its amenities
The letter states that “loans secured by units in condo and co-op projects with significant deferred maintenance or in projects that have received a directive from a regulatory authority or inspection agency to make repairs due to unsafe conditions are not eligible for purchase. These projects will remain ineligible until the required repairs have been made and documented.”
If you have questions about how the new loan eligibility requirements affect your condominium association, please contact any member of Carmody MacDonald’s Homeowner and Condominium Association practice.
You can view Fannie Mae’s October 13, 2021 letter in its entirety here: https://singlefamily.fanniemae.com/media/29411/display
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