The Community Associations Institute, the premier global organization assisting homeowner’s associations, condominium associations, and housing cooperatives, is still urging the Federal Housing Finance Agency (FHFA) to update the eligibility requirements for condominium loans administered by government-sponsored organizations such as Freddie Mac and Fannie Mae. Millions of homeowners countrywide and thousands of reputable condominium associations are unable to finance mortgages due to these antiquated regulations.
The main lenders for homebuyers across the country are FHFA-supervised Fannie Mae and Freddie Mac. Millions of homeowners are unable to sell their properties because of stringent eligibility requirements that have put thousands of condominium organizations on the ineligible list. The general stability and affordability of the condominium market are at risk due to these restrictions, which also narrow the pool of qualified purchasers, lower unit values, and put a pressure on association finances by reducing cash for reserves and maintenance.
Condo Loans, U.S. Market Activity & More
Safety improvements implemented following the Surfside collapse, such as increased insurance premiums and reserve requirements, are also driving up costs for the market. Despite the fact that these steps are necessary for long-term security, existing lending regulations have not changed to reflect these developments. For responsible associations that struggle to strike a balance between affordability and safety, the disconnect results in unforeseen consequences.
“More than 5,400 condominium associations are currently listed as ineligible for financing by Fannie Mae and Freddie Mac, directly impacting over 1 million homeowners who face difficulty selling their homes,” says Dawn M. Bauman, CAE, CEO at Community Associations Institute. “This situation threatens homeownership affordability, property values, and community stability.”
Recently, FHFA officials met with CAI’s Government and Public Affairs team to discuss pressing issues and policy suggestions for modernizing regulations. Well-run condominium organizations that are striving to satisfy changing requirements for reserves, building upkeep, and insurance are disproportionately impacted by the current limitations.
In particular, CAI is requesting that FHFA instruct Freddie Mac and Fannie Mae to:
- Modernize and clarify insurance and reserve requirements to align with today’s market realities.
- Eliminate impractical rules such as insurance requirements that are either unavailable or cost prohibitive.
- Provide secure, direct access to eligibility status and remediation guidance for condominium boards and their authorized managers.
- Implement a realistic, data-driven timeline for reserve study completion and funding compliance for associations of all sizes.
“These necessary changes will help preserve homeownership opportunities and stabilize condominium communities across the U.S.,” Bauman said. “Without timely action, homeownership will become less accessible, property values will decline, and communities nationwide will face financial instability. CAI stands ready to partner with FHFA, Fannie, Freddie, and other stakeholders to create effective policies that safeguard both safety and market access.”
To read more, click here.
