The tragic collapse of a residential building inspired Fannie Mae’s new guidelines which will help ensure the structural safety of condo buildings.
New lending requirements by Fannie Mae and Freddie Mac are rooted in the collapse of the Champlain Towers in Surfside, Fla., that left nearly 100 people dead last June. The federally chartered corporations drafted guidelines to ensure structures are safe for condo borrowers and lenders. Fannie Mae sent a letter to lenders outlining new requirements to qualify for loans on condos – namely detailed records regarding repairs, plans for future maintenance and a maintenance history. To further emphasize its point, Fannie Mae subsequently issued an “unavailable” list of more than 950 condominium projects across the US now deemed ineligible for government-backed loans given varying states of disrepair. Orest Tomaselli (pictured), president of Project Review at CondoTek, told MPA the new rules will make sales of certain condo buildings difficult at best and impossible at worst. The domino effect has already begun as Freddie Mac followed Fannie Mae’s lead in rendering such condo units ineligible for financing. Tomaselli said mainstream lenders had already begun aligning themselves with the same stance. “Fannie Mae and Freddie Mac are really focusing on three specific aspects of condominiums and cooperative lending,” Tomaselli said. “Those are the infrastructure of the condominiums or cooperative developments to make sure they’re not in serious disrepair, to make sure that those infrastructure components are being maintained or replaced appropriately. Number two, they’re looking at the financial wherewithal of these developments to make sure they have enough money to actually do the repairs to the structure and foundation and everything else that’s necessary. And the third aspect of it is really to enforce the gathering of information about these developments so they can compile the appropriate list which comes in the form of updated questionnaires specifically pertaining to structure, condominium and finances of a condominium development.”
Source: Mortgage Professional America