On Wednesday, April 12th, 2022, NAR along with staff of the Chicago Associations of REALTORS®, Florida Associations of REALTORS®, Miami Associations of REALTORS®, and the South Carolina Associations of REALTORS® as well as individual REALTORS® from each of these areas met with senior staff of Fannie Mae to discuss issues that have arisen from the recently implemented safety and reserving requirements.
While well intentioned, the new requirements to verify the physical soundness of condo buildings and adequacy of financial reserves have created problems in the market. The group impressed upon Fannie Mae that:
- Misinformation in the market is leading to many homeowner associations (HOAs) pulling back from participating in Fannie Mae-backed lending.
- Some HOAs, management companies, and their counsels are refusing to sign documents attesting to the safety and financial soundness because the information is not accessible.
- Fannie Mae and Freddie Mac finance nearly half of all mortgages in the US, so the impacts are large, especially in markets rich with condos.
- The impact is also likely to be felt disproportionately in communities with fixed incomes or in low and moderate-income areas.
- The lack of financing is pushing more sales to cash buyers and investors.
For its part, Fannie Mae indicated that unintended consequences have come up and that it plans to repropose the rules with an opportunity for further public input.
NAR has been in close contact with Fannie Mae and Freddie Mac about this problem and held multipe discussions. NAR also set a letter to their regulator the Federal Housing Finance Agency requesting a delay to better explain and message the changes to the market and to resolve problems with documenting safety.
NAR will continue to engage with our member associations and REALTORS® to improve the accessibility of this important financing source for condo buyers.