{"id":181841,"date":"2025-03-30T06:49:50","date_gmt":"2025-03-30T12:49:50","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=181841"},"modified":"2025-03-30T06:49:52","modified_gmt":"2025-03-30T12:49:52","slug":"fannie-maes-growing-list-of-blocked-financing","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/fannie-maes-growing-list-of-blocked-financing","title":{"rendered":"A Secret Mortgage Blacklist From Fannie Mae is Blindsiding Condo Owners and Killing Deals"},"content":{"rendered":"\n

A secret <\/span>blacklist<\/span>? It sounds like something from a Netflix thriller. However, that’s the scenario unfolding when some condo owners have attempted to sell their homes and investments, according to a report in the<\/span> Wall Street Journal<\/span><\/a><\/em>.<\/span><\/p>\n\n\n\n

Described as a Fannie Mae-maintained “secret mortgage <\/span>blacklist<\/span>,” it refers to a list compiled by the government-funded mortgage backer in the wake of the <\/span>Surfside condo collapse in Florida<\/span><\/a> in 2021 that killed 98 people. Properties on the list are, in the eyes of Fannie Mae, in need of considerable repairs or do not have adequate insurance. A property on the list makes it harder for a buyer to get a mortgage <\/span>for it<\/span>. <\/span><\/p>\n\n\n\n

The <\/span>Journal <\/span><\/em>article mentions real estate agent Paul Gangi, who was on the verge of closing his listing in Shadow Ridge, a 440-unit townhouse and condo complex in Ventura County, California, in December. “I got a panicked call from the lender saying, \u2018Sorry, we’ve just found out Shadow Ridge has been <\/span>blacklisted<\/span>,'” he said. After trying other options for the loan, the buyer had to back away.<\/span><\/p>\n\n\n\n

Developers and Homeowners Are Suffering<\/span><\/h2>\n\n\n\n

The list has mushroomed to 5,175 properties nationwide from a few hundred before the Surfside collapse. Unsurprisingly, the states with the most properties on the list (1,400) are based in Florida, with California next, followed by Colorado, Hawaii, and Texas.<\/span> <\/span><\/p>\n\n\n\n

Fannie Mae and its sister government-sponsored enterprise, Freddie Mac, buy roughly half of the country’s home loans from lenders <\/span>and package<\/span> them to sell to investors, then guarantee payments on them.<\/span> They have increased their insurance guidelines to such an extent that lenders now have to check whether a property in the two government entities will accept loans on a specific project. Although Fannie refused to classify its property data as a “blacklist,” in theory, that\u2019s what it is. <\/span><\/p>\n\n\n\n

Insurance Costs Are Crippling<\/span><\/h2>\n\n\n\n

The advice is simple for investors interested in transacting a property that could be affected by the new guidelines: Do <\/span>your<\/span> research and consult with your lender before attempting to get a loan. Even if your condo is not on the list, the transaction could still run into trouble when monthly association costs <\/span>are calculated<\/span>. Condo association board members say insurers have aggressively raised prices due to the new Fannie and Freddie guidelines.<\/span><\/p>\n\n\n\n

In the case of Shadow Ridge, the LA complex <\/span>blacklisted<\/span> in December, a Fannie-compliant policy was quoted at $2.6 million per year, 10 times its current amount, making it virtually impossible to sell through a Fannie-backed lender and making it prohibitive to for people to live there. However, the specter of another Surfside or natural disaster has Freddie and Fannie wanting to cover their bases with ramped-up insurance.<\/span><\/p>\n\n\n\n

Reasons a Condo Could Be Blacklisted<\/span><\/h2>\n\n\n\n

There can be many different reasons a condo could be on the Fannie Mae mortgage <\/span>blacklist<\/span>, including:<\/span><\/p>\n\n\n\n