HOAleader.com - Tip of the Week - December 3, 2021
Published: Fri, 12/03/21
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HOAleader.com - Tip of the Week - December 3, 2021
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In this week's tip, we report on a change that could hamstring your condo if you've been stalling on doing necessary repairs.
One of the major players in making sure loans are affordable and available to purchase condos and single-family homes, the Federal National Mortgage Association, will stop purchasing mortgages in condo associations that have significant deferred maintenance. This change will take effect Jan. 1, 2022.
Fannie Mae is the shorthand name for FNMA. It's an entity that doesn't make loans, but it does guarantee loans and purchase them on the secondary market, which means its actions could significantly affect the home financing market.
In the wake of the Surfside, Fla., condo collapse, Fannie Mae Director Jodi Horne wrote in a blog post: "Loans secured by units in attached condo and co-op projects with significant deferred maintenance or that have received a repair directive from a local regulatory authority or inspection agency to make repairs due to unsafe conditions are ineligible for delivery to us until required repairs have been made."
The lender letter spelling out the changes stresses that Fannie Mae isn't focusing on repairs or maintenance that don't affect safety, soundness, structural integrity, or habitability. An example of what Fannie Mae isn't focusing on is isolated water damage to a unit from a leaky pipe or damage from a small fire affecting the interior of a specific unit.
The entity is also halting its practice of allowing lenders to obtain a reserve study instead of the condo association meeting Fannie Mae's 10 percent budget reserve requirement.
It's early days, and the directive hasn't formally gone into effect yet. So this is likely going to be an issue condo boards will have to work through as Fannie Mae implements the new policy.
Read our new article, What to Know about Fannie Mae's New Stand on Deferred Maintenance in Condos, https://www.hoaleader.com/members/4429.cfm, to find out what we do know so far, and to hear about how condos are already feeling the effects of tighter scrutiny in the wake of the Surfside tragedy.
Best regards,
Matt Humphrey
President
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