The "Secret" Mortgage Blacklist: Why Some Condos Are Unsellable

The Unexpected Roadblock for Condo Owners

Imagine being steps away from closing on the sale of your condo—only to hit an invisible wall. That’s exactly what’s happening to thousands of condo owners nationwide due to a growing, largely undisclosed mortgage blacklist.

Many condominium properties are finding themselves ineligible for Fannie Mae-backed mortgages, making it increasingly difficult for buyers to secure loans. If a condo complex appears on this list, deals can fall apart in an instant, leaving homeowners stuck at the starting line with no clear path forward.

What’s Causing Condos to Get Blacklisted?

Fannie Mae’s list includes properties flagged for inadequate insurance coverage or urgent structural repairs. This initiative gained momentum following the tragic Surfside condo collapse in Florida in 2021, which heightened scrutiny over condo safety. But now, with the nationwide insurance crisis pushing costs through the roof, many condo associations are struggling to meet Fannie Mae’s increasingly strict requirements.

How big is the problem? The number of condo projects failing to meet Fannie Mae’s standards has surged to over 5,175 properties this month—compared to just a few hundred before Surfside. This means thousands of condo owners are discovering their properties are essentially unsellable unless buyers can pay in cash or secure alternative financing.

States Most Affected by the Blacklist

Some states are feeling the impact more than others. Florida tops the list, with over 1,400 condo developments flagged, in part due to new safety laws following Surfside. Other heavily affected states include:

🏁 California

🏁 Colorado

🏁 Hawaii

🏁 Texas

🏁 Georgia

🏁 New Jersey

🏁 South Carolina

🏁 Illinois

🏁 New York

Natural disaster risks and rising insurance costs in these states have made it even harder for condo associations to comply with Fannie Mae’s evolving guidelines.

The Insurance Hurdle: A Major Stumbling Block

Fannie Mae and Freddie Mac require condos to have adequate insurance in place to qualify for mortgage backing. However, skyrocketing insurance rates are putting condo associations in a tough position.

For example, the Shadow Ridge complex in Los Angeles was blacklisted in December, despite escaping recent wildfires. The homeowner’s association was quoted $2.6 million per year for a Fannie Mae-compliant policy—10 times its current rate. With those kinds of increases, many associations are opting for non-compliant policies, effectively shutting out potential buyers who need traditional financing.

This creates a vicious cycle:

• Homeowners can’t sell their units.

• Condo boards can’t afford compliant insurance.

• More developments land on the blacklist.

  
  

What This Means for Buyers and Sellers

For condo owners looking to sell, getting financing can be like running a marathon with no finish line in sight. Even if buyers are interested, their mortgage applications may be denied due to the blacklist. Some homeowners are being forced to slash their listing prices to attract cash buyers.

For example, Robert Cenzon, a condo owner in Dallas, listed his unit for $239,000 but ultimately had to lower the price to $170,000 to close the deal. His first buyer’s mortgage was denied because the condo association’s insurance didn’t cover certain amenities, such as the pool. He was fortunate to find a lender willing to work around it, but not everyone is so lucky.

What Can You Do If Your Condo Is on the List?

🏁 Check Your Property’s Status: If you’re planning to buy or sell a condo, verify whether the property is on Fannie Mae’s restricted list. Your lender or real estate agent can help with this.

🏁 Explore Alternative Loan Options: While Fannie Mae-backed mortgages are the most common, other financing options exist. That’s where ReadySetLoan can help—our team specializes in finding creative loan solutions even when traditional financing falls short.

🏁 Talk to Your HOA: If your condo association is struggling to meet insurance requirements, work with them to explore alternative providers or policy structures that comply with Fannie and Freddie guidelines.

🏁 Consult with a Mortgage Expert: The mortgage landscape is changing rapidly, and what worked a few years ago may not work today. Let ReadySetLoan be your guide in navigating these new challenges.

Don’t Get Stuck—Find the Right Loan Today

If you’re worried about how this secret blacklist might impact your condo purchase or sale, don’t race alone. ReadySetLoan is here to help you find the best loan solutions, even in tricky situations.

🏁 Contact us today and let’s get you back on track to homeownership success! 🚀

www.ReadySetLoan.com