Affordable Housing in the USA

February 2024

There is a list of condo properties for which buyers cannot obtain a mortgage in the United States.  Lenders have access to this list and are unable to share it with others.  Deals fall apart at the last minute when owners trying to sell their property learn their buyer is unable to obtain a loan.

This list is maintained by the Federal National Mortgage Association – Fannie Mae.  It is a secret nationwide blacklist of condominium properties for which it will not purchase mortgages.  The list is distributed monthly to mortgage lenders.

Fannie Mae and its sister organization, the Federal Home Loan Mortgage Corporation – Freddie Mac – purchase home mortgages, package them, and sell them to investors.  This allows borrowers in low-income brackets and with lower credit scores who have saved for a down payment to obtain a loan.  Combined, they represent 70 percent of the mortgage market according to the National Association of Realtors.  Buyers of properties that Fannie Mae and Freddie Mac won’t touch must look elsewhere for a loan.

There may be water infiltration issues that are causing infrastructure deterioration.  Condominium developments that include a commercial component, insufficient owner-occupied units, those in litigation, and many unit owners in arrears on fees are reasons to be added to the list.

No such list seems to exist in Canada.  If one were to exist, this would protect those purchasing condominiums in communities failing to adequately maintain their infrastructure.  It would deter communities from underfunding their reserve fund and surprising owners with special assessments.