HOA Detective™ – 3-21-2025: In recent years, condominium owners across the United States have encountered an unforeseen obstacle when attempting to sell their properties: a covert mortgage blacklist maintained by Fannie Mae. This list includes condo associations that either lack sufficient property insurance or require significant repairs, rendering units within these Associations ineligible for conforming loans. Consequently, potential buyers struggle to secure mortgages, leading to stalled sales and declining property values.
“BLACK” & “COVERT” is No Joke: It should be noted that the terms “covert” and “blacklist” are not used lightly in this context. As CIDAnalytics found out when its 11/11/2023 FOIA request was summarily dismissed by Fannie Mae after the agency tried to argue that it was NOT part of the Federal Government and therefore not subject to the FOIA!
https://hoadetective.com/fannie-mae-condo-blacklist-to-be-made-available/
The Genesis of the Blacklist: The tragic collapse of the Champlain Towers South in Surfside, Florida, in 2021 catalyzed heightened scrutiny of condominium safety and insurance adequacy. In response, Fannie Mae expanded its mortgage blacklist to encompass condo associations failing to meet stringent insurance requirements or those with deferred maintenance issues. While the intent was to safeguard buyers and financial institutions, the lack of transparency surrounding the blacklist’s criteria has left many condo owners blindsided when their properties become unsellable.
Escalating Insurance Costs: A Nationwide Concern: Compounding the issue, condominium associations nationwide are grappling with soaring insurance premiums. Factors such as an uptick in natural disasters, rising reconstruction costs, and stricter underwriting standards have contributed to these hikes. For instance, in California, major insurers like State Farm have sought emergency rate increases of up to 22% to offset wildfire-related losses. These elevated costs strain association budgets, often leading to reduced coverage or the inability to secure necessary insurance, further jeopardizing mortgage eligibility.
The Domino Effect on Property Sales: The convergence of these challenges creates a precarious situation for condo owners:
- Mortgage Ineligibility: Units within blacklisted associations are barred from conforming loans, narrowing the pool of potential buyers to those capable of all-cash purchases or willing to pursue higher-cost, non-conforming loans.
- Depressed Property Values: The diminished buyer pool and increased financial risks lead to declining property values, eroding homeowners’ equity and investment returns. https://www.wsj.com/real-estate/climate-change-to-wipe-away-1-5-trillion-in-u-s-home-values-study-says-60c6970b
- Financial Strain on Associations: Escalating insurance premiums force associations to hike dues or levy special assessments, placing additional financial burdens on residents and potentially deterring prospective buyers.
- https://www.wikiwand.com/en/articles/Climate_change_and_insurance_in_the_United_States
Navigating the Turbulent Waters: For current and prospective condo owners, awareness and proactive measures are crucial:
- Due Diligence: Before purchasing, investigate the condo association’s financial health, insurance coverage, and any pending maintenance issues.
- Advocacy: Engage with association boards to ensure compliance with safety standards and adequate insurance coverage, thereby mitigating the risk of blacklisting.
- Contingency Planning: Prepare for potential increases in association dues or special assessments resulting from rising insurance costs or mandated repairs.
A Growing Risk for Fixed-Income Retirees: Perhaps most at risk in this shifting landscape are retirees living on fixed incomes. As insurance premiums skyrocket and associations are forced to raise dues or impose special assessments, many retirees find themselves financially squeezed with little flexibility to absorb the added costs. For those who purchased their condos as a stable, affordable place to age in place, the compounding effects of a volatile insurance market and regulatory indifference can and have turned a secure retirement into a source of stress and uncertainty for many seniors.
Without policy reforms or meaningful market stabilization, this vulnerable population may face difficult choices — including selling at a loss or being priced out of their homes altogether.
https://nypost.com/2025/03/18/real-estate/inside-the-death-of-the-starter-home-in-florida
Because You’re Buying More Than a Home!
