Authors Jean Eaglesham and Nicole Friedman authored an article which was recently published in the Wall Street Journal. A link to that article can be found here. A few years ago, after the Surfside, Florida disaster in June 2021 where a condominium building collapsed, Fannie Mae updated its requirements for loan approvals in condominium communities throughout the United States. These updated regulations relate to insurance, maintenance, repair, and replacement of common elements, reserve requirements, and deferred maintenance, especially in relation to building structures, among other things.

Why is this an issue and why should you be concerned? Because around 70% of all loans for condominium mortgages in the United States are backed by Fannie Mae or Freddie Mac. This means if your community does not meet the Fannie Mae guidelines and regulations, potentially your community could be “blacklisted.” The article in the Wall Street Journal focused on the issue of insufficient property insurance, but a community association could be blacklisted due to other underwriting factors, namely structural repairs, and deferred maintenance in the community.

We do not communicate this information to scare you, but to educate you as to the importance of making sure the association’s insurance policies meet what is required per the declaration, Ohio law, and Fannie Mae/Freddie Mac guidelines and to be sure the required ongoing maintenance, repair, and replacement projects are completed as needed, reserve studies are kept updated, and reserves are set aside sufficiently to pay for those projects. Obviously doing so comes with a high cost for each homeowner in a community which typically translates to higher assessments to pay for those costs.

Many Ohio communities will not be in the same predicament as many of the east or west coast communities are in because of the natural disasters affecting those coastal communities, but the same lending guidelines apply to Ohio condominiums. We urge all of our clients to use the free one-hour complimentary meeting with one of our attorneys to discuss questions or concerns you may have about the guidelines, including topics such as reserves, reserve studies, insurance, and upcoming maintenance or replacement projects for your community. The more information you have to avert issues related to lending and buyers securing mortgages in your community, the better off you will be in the future. 

Please contact any of our attorneys at (614) 228-0207 to schedule a one-hour free meeting at your convenience.