After the catastrophic condo collapse in 2021 in Surfside, Florida, mortgage lenders have become hyper aware of the dangers and risks associated with aging buildings.
Major loan companies, such as Fannie Mae and Freddie Mac, are enacting tougher requirements to determine whether a condo property is eligible for a loan. The concern is focused on condominium buildings with aging infrastructure and signs of structural deficiencies.
Fannie Mae and Freddie Mac back nearly half of all U.S. mortgages, meaning their tightened requirements will significantly impact the Florida condo sales market.
These requirements include an in-depth review of a condo building’s structural safety and habitability. Condo units located in buildings with significant deferred maintenance, or that have received a directive from local authorities to make repairs due to unsafe conditions, will be ineligible for a loan until all necessary repairs are made.
Additionally, lenders will begin to thoroughly review a building’s financial documents, including meeting minutes and accounting records. Mortgage lenders want to know whether a condominium association recently imposed or plans to impose a special assessment for critical repairs, and whether the association has adequate funding for such projects.
In Broward and Miami-Dade counties, numerous condominium buildings are coming up on their 40 and 50-year recertifications, and many have already been issued building violations from local authorities. Under the new requirements, condo sales in these buildings will be ineligible for loans until proper repairs are made.
You can read about the new Fannie Mae policies here, as well as the new Freddie Mac policies here.
If you need help obtaining association documents to facilitate your real estate transaction, please do not hesitate to schedule a consultation with our office.
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Photo from Canva
