Fannie Mae has released a new report revealing their focus on long-term homeownership sustainability, continuously refining our property and underwriting requirements to help set homebuyers up for success.
While homes in condo and co-op projects are a great choice for many consumers—especially first-time homebuyers, who make up a higher concentration of condo and co-op buyers—we are mindful of the unique considerations of those ownership types and the challenges of aging infrastructure.
As the market evolves and new issues emerge, Fannie Mae is evaluating their policies to develop innovative solutions to support the condo and co-op market.
In 2021, we introduced new temporary requirements designed to help protect borrowers from physically unsafe or financially unstable projects. Since then, concerns about aging infrastructure have continued, including reports of projects with structural challenges that, in some instances, led to evacuations and condemnations.
Because of that risk, Fannie Mae is making many of those temporary provisions permanent as part of recently updated policies to address projects in need of critical repairs, projects that have material deficiencies (such as significant deferred maintenance), and special assessments for projects consisting of five or more attached units.
Fannie Mae’s revised policies support the ongoing viability of condo and co-op projects by requiring disclosure of needed critical repairs and significant deferred maintenance that may impact the safety, soundness, structural integrity, or habitability of a condo or co-op unit, or the overall project and its amenities.
Loans secured by units in condo and co-op projects requiring critical repairs or that have unresolved significant deferred maintenance will not be eligible for sale to Fannie Mae until the required repairs are made.
Fannie Mae has also adopted a policy that requires lenders to evaluate special assessments, including the reason for the assessment and the ability of unit owners to make timely payments for the assessment.
Our updated condo and co-op requirements are designed not only to protect lenders and Fannie Mae from a risk management perspective, but also to protect borrowers from physically unsafe or financially unstable projects, which could translate to significant spikes in homeownership costs. Together, these policies promote safe and sustainable homeownership.
To read the full release, and more on their eligibility process, click here.