New Requirements for Condo Projects: What it Means for Your Mobility Program
The tragic collapse of Champlain South Tower in Surfside, Florida has brought increased awareness to the safety and structural integrity of condominium projects. Lenders and others in the multi-dwelling industry are increasingly concerned as many condo buildings were built more than twenty years ago and may have significant instances of deferred maintenance.
Fannie Mae has addressed the concerns in the industry by issuing new requirements that apply to condo projects with five or more attached units. These new requirements went into effect January 1, 2022.
New Requirements and Impact on Your Mobility Program
The new requirements are meant to assist lenders in determining if a condo project has significant deferred maintenance that impacts the safety, soundness, structural integrity, and habitability of the project. In addition to the existing policies regarding condo eligibility, Fannie Mae has suggested the following best practices for lenders:
- Review homeowners association minutes: Lenders should review the past six months of homeowners association (HOA) meeting minutes for any references to deferred maintenance.
- Review inspections and reports: Lenders should review any inspections, engineering, or other certification reports from the past five years for any signs of deferred maintenance.
- Appraisers must document special assessments or deferred maintenance. Lenders need to have their appraisers document any special assessments or deferred maintenance that may impact the safety, soundness, structural integrity, or habitability of the unit or the overall project.
Whether your relocating employee is buying or selling a condo, they may face some new challenges because of these updated requirements. Let’s look at how these changes may impact your relocating employees.
Impact on relocating employees trying to purchase a home
- Additional information required: Lenders will require the additional information mentioned above, which will need to be supplied by the HOA.
- Expect pushback: These requirements are new, so lenders may get questions and/or pushback from HOAs asked to supply additional information.
- Additional time and process changes: Many HOAs currently use third-party services that complete a standard lender questionnaire. These third-party services may not be able to provide these newly requested items, so additional time and process changes may be necessary to connect with the HOA.
Impact on relocating employees trying to sell a home
- Home sale challenges: Relocating employees who own a condo that does not does not meet these new eligibility requirements may struggle to sell their home.
- Buyer financing challenges: A buyer of the relocating employee’s condo may face the challenges mentioned above when trying to obtain financing.
Supporting Your Relocating Employees
At the time of this writing, there has not been communication from Freddie Mac, FHA, or VA. Employers should be aware that their relocating employees may face additional challenges when buying or selling a condo. SIRVA has an experienced team that will help guide your relocating employees through the home buying and selling process in light of the new requirements.
To learn more about how the new requirements for condo projects may impact you and your relocating employees, contact us at MortgageClientServices@sirva.com or reach out to your SIRVA representative.
Margaret DeLuca, Director, Real Estate Risk
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- Protecting Condos as a Sustainable Housing Option
- Condo, Co-Op, and PUD Eligibility