By Jean Eaglesham and Nicole Friedman
Condominium owners across the country are facing a paralyzing problem: They can’t sell their properties because of a fast-growing and mostly secret mortgage blacklist.
Real-estate agent Paul Gangi was days away from closing a sale of his listing in Shadow Ridge, a 440-unit townhouse and condo complex in Ventura County, Calif., in December. That is when his phone rang.
“I got a panicked call from the lender saying, ‘Sorry, we’ve just found out Shadow Ridge has been blacklisted,’” he said. The buyer tried several other options for getting a loan, without success, and the sale collapsed.
The blacklist is maintained by Fannie Mae and includes condo associations that the mortgage finance giant thinks don’t have adequate property insurance or need to make critical building repairs. Being on the list can make it harder for potential buyers to get a mortgage.
According to lenders and real-estate agents, Fannie Mae greatly expanded the list after the Surfside condo collapse in Florida in 2021 killed 98 people. Compounding the problem, a nationwide insurance crisis is making it more expensive for condo associations to afford adequate coverage.
The number of properties that fail to meet Fannie Mae’s standards has risen to 5,175 this month from a few hundred before Surfside, according to Stephen Marcus, a condo lawyer at Boston law firm Allcock & Marcus. Like other industry legal and finance players, he has access to the list of properties that don’t meet the criteria.
Disclaimer
The information contained in South Florida Reporter is for general information purposes only.
The South Florida Reporter assumes no responsibility for errors or omissions in the contents of the Service.
In no event shall the South Florida Reporter be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other tort, arising out of or in connection with the use of the Service or the contents of the Service. The Company reserves the right to make additions, deletions, or modifications to the contents of the Service at any time without prior notice.
The Company does not warrant that the Service is free of viruses or other harmful components
