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We are happy to report that Fannie Mae has created a new online tool to help associations become aware of their “Fannie Mae” eligibility status, the Condo Status Finder. Being “Fannie Mae Qualified” is important, as it allows individual consumers to get the most attractive mortgage terms (rates). Lenders like to sell mortgages in the association to Fannie Mae, enhancing their liquidity (having more cash on hand to lend), and thus enhancing their ability to make more mortgages available to other consumers.
Providing a way for lenders to increase their liquidity by selling off their mortgages is good for our country and the reason why Fannie Mae and Freddie Mac exist. Mortgages in associations not Fannie Mae approved for one reason or another will not qualify for sale to Fannie Mae, and are thus burdensome to the lender. In those cases, financing options for units in that project will be more limited depending on the lender and loan program, making purchasing the home more expensive, and in the long run, driving down home values.
It is understandable that Fannie Mae (and Freddie Mac) have minimum physical and financial standards for Condo and Co-Op associations to appear on their “approved” list. For instance, the minimum replacement-reserve allocation for applicable Full Reviews is currently 10% of annual budgeted assessment income and will increase to 15% for loan applications dated on or after January 4, 2027 (different review paths and reserve-study provisions may apply).
Fannie Mae and Freddie Mac strengthened condominium project standards in the years following the tragic 2021 Champlain Towers South collapse, with greater attention to critical repairs, deferred maintenance, structural safety, insurance, and reserve funding. This led to an increase in the number of associations not approved, confusion among managers and board members regarding if their association was approved, and if not, why.
Previously, some associations were unaware that their association had moved to the “unapproved” list. With this new Fannie Mae tool, managers and board members can go online to check on the approved/unapproved status of their association at any time – and do something about it as necessary. See here for Fannie Mae’s overview.
What Is the Fannie Mae Condo Status Finder?
Fannie Mae’s Condo Status Finder is a free online tool that allows HOAs, management companies, and authorized advisors to check whether Fannie Mae is aware of conditions that could make a condominium project ineligible under its project requirements.
What Do Fannie Mae Condo Status Finder Results Mean?
Fannie Mae has released the Condo Status finder to provide Condo and Co-Op managers and board members the ability to check if Fannie Mae is aware of any condition at the project that does not meet one or more of their published Selling Guide (B4-2) requirements. This new online tool exclusively for Condo and Co-Op associations creates transparency into the association’s Fannie Mae approval status by explaining why the association may not meet their published requirements. The tool may return one of four results:
| Result | What it means |
|---|---|
| No findings | Fannie Mae found the project record and does not currently identify it as ineligible. Note: This does not mean Fannie Mae has reviewed or approved the project. |
| Ineligible conditions | Fannie Mae has identified one or more project conditions that do not meet its eligibility requirements. |
| No project | Fannie Mae could not locate the project using the information entered. |
| Multiple projects found | The search returned multiple possible projects and the information needs to be refined. |
What Should an HOA Do If Fannie Mae Shows Ineligible Conditions?
Associations are uniquely positioned to remedy any identified conditions and are encouraged to work with the mortgage lenders currently working with individual buyers so that their lenders can submit clarifying documentation to Fannie Mae. Once received, Fannie Mae reviews the information to determine if an update to the project status is appropriate. If the association remains on the unapproved list, Boards and Managers can encourage their homeowners and potential buyers to work with lenders to explore other financing options.
How Can HOA Boards Use the Condo Status Finder?
Condo and co-op managers and board members can access the free tool by registering on the site and searching for their community by providing appropriate identifying information (name, address, tax id#…). Homeowners and potential buyers may also ask the manager or a board member to look up the association to learn the status in advance of any upcoming sale, purchase, or mortgage event.
Bottom line – no more “black hole” of clarity on the matter of “blacklisted” associations. With this new online tool, Fannie Mae has made appropriate adjustments to enhance the efficiency of their Condo/Co-Op lending process and created a transparent environment that benefits all participants and drives sustainable homeownership. It gives community associations an opportunity to identify potential problems earlier, investigate the underlying issue, and work with lenders and appropriate professionals before a financing problem comes by surprise.
Disclaimer: Fannie Mae project requirements and review processes can change over time and may vary based on the project and loan review path. Boards and managers should consult Fannie Mae’s current guidance and work with the lender handling the specific transaction when determining project eligibility.