Fannie Mae and Freddie Mac have recently announced that they will be requiring banks to evaluate the physical condition of a condo building before approving a mortgage for either the building itself or one of its individual units.
Should the evaluation reveal structural deficiencies or that critical repairs are in order, Fannie and Freddie will not back the loan for the condo. Similarly, if condo complex owners do not allocate funds to address these repairs, they will likely not be able to have any loans in their complex funded by Fannie and Freddie. Additional inspection requirements apply to condos within three miles of any coastline.
This decision comes after the partial collapse of the Champlain Towers South condo building in Florida in June 2021. The unfortunate accident took the lives of 98 people and injured several others. Currently, these new regulations are temporary orders, though it is likely that they will be put into permanent effect later this year.
If you have any questions about how this will affect your ability to purchase a condo, particularly on the New Jersey shore, please reach out. We are always available to assist.