Now that we have reviewed the key pre-2021 condo HOA underwriting standards, it’s time to review the updates. Fannie Mae and Freddie Mac are now requiring HOAs to answer the following new questions:
- Are there any significant deferred maintenance issues or unsafe conditions present for the project? If the HOA respondent answers yes, then they must provide more detail about the following:
- Does the building have deficiencies, defects, damage, or deferred maintenance that could affect the safety, structural integrity, or habitability of the project? If the answer is yes, the underwriter will require more detail and any documentation (e.g., inspection reports, engineering documents, etc.) pertaining to the documented issues.
- Does the project require substantial repairs or rehabilitation? If the answer is yes, the underwriter will require more details including the planned completion date for the work and related documentation.
- Is there any impediment to the safe and sound functioning of any key building components, including foundation, roof, HVAC, plumbing, load bearing structures, or electrical system? Again, details and documentation must be provided if the answer is yes.
- Has the project failed to obtain occupancy certificates or pass local regulatory inspections or certifications? If yes, details and documentation must be provided.
- Does the project have any current or planned special assessments?
- If yes, detail must be provided regarding reasons for the special assessment, total amount due, and repayment terms.
- If yes, the HOA must document whether the current budget is sufficient to fund any necessary repairs.
As you can see, the Florida condo tragedy really grabbed the attention of Fannie and Freddie executives. They now want to carefully verify that the buildings / projects that serve as collateral for condo mortgages are safe and structurally sound.
Do you know someone who wants to buy a Georgia condominium? If you do, ask that buyer if they like wasting time and money. If they answer “No,” please refer them to me. I’ll work with the buyers and their Realtors during the home search, coaching them on key HOA questions to ask listing agents early in the process, before they spend time searching for and waste money on inspections and appraisals for ineligible condos.
