700 condo buildings in South Florida on secret mortgage blacklist

The number of South Florida condo buildings on a Fannie Mae blacklist has more than doubled in the past two years, as the financial strain on condo associations worsens.

Nearly 700 condo communities in Miami-Dade, Broward and Palm Beach counties are on the list, marking almost half of the 1,438 buildings that the federally chartered mortgage finance corporation lists as ineligible in Florida, according to the Miami Herald.

Jake Marcus, a Miami-based attorney for Allcock Marcus, which compiled the data, told the newspaper that he believes Freddie Mac has its own official list.

Fannie Mae has not made its list publicly available to condo owners and associations. Only when a lender rejects an application from a buyer do owners typically realize that their building or association has been blacklisted.

About 13,000 condo associations exist in South Florida.

Fannie Mae will not back loans on units in condo buildings because of financial, maintenance or insurance issues, all of which are typically intertwined. Owners in these buildings may have a harder time selling their units because buyers are more hard-pressed to secure conventional financing. It’s also detrimental for existing condo owners in need of financing.

The increase in buildings under financial strain is in part due to the state’s condo safety law, enacted after the deadly collapse of the Surfside condo building Champlain Towers South in 2021. State lawmakers beefed up financial and safety requirements, requiring all condo associations to complete structural integrity reserve studies by the end of last year.

Starting this year, they are required to fully fund reserves. Condo associations also face milestone inspections once buildings reach 30 years, or sooner depending on their proximity to the coast, and every 10 years afterward.

Older buildings and those that have deferred fully funding their reserves or completing maintenance are facing more challenges, including securing insurance coverage they can afford.

— Katherine Kallergis

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