As you may have heard by now, Fannie Mae and Freddie Mac have been keeping a secret list of condominiums which they have deemed ineligible for financing. Meaning that Fannie Mae will not purchase or back loans made in connection with condominiums that are on its list. Fannie Mae and Freddie Mac, which are government sponsored entities under the conservatorship of the Federal Housing Finance Agency back approximately 70% of all residential loans in the United States. The blacklist has swelled to over 2,000 condominiums, HOA’s and Cooperatives and it will continue to grow.
Condominiums have been finding their way onto the list based on answers and information provided by Condominium Boards and Management companies in response to lender questionnaires. The reasons for landing on the list are varied, but typically involve: (1) inadequate reserves, (2) inadequate insurance, (3) too many delinquencies, (4) too much commercial space, (4) structural or construction issues, (5) outstanding special assessments, and (6) too many rentals.
Since Allcock & Marcus became aware of the list earlier this year, we have petitioned the Federal Government to release the list or make it public. We have always believed that making the list available or at least accessible would allow associations to understand the implications and allow them to take appropriate action to ensure that their community was marketable. We have served the Federal Government with FOIA requests. In response, Fannie and Freddie claimed that they were not government agencies and had no obligation to make that information available. Our efforts to obtain the information FHFA were met with the response that they did not have the blacklist and pointed the finger back and Fannie and Freddie.
Instead of engaging in litigation with the federal government, we obtained a copy of the list through other means and since May 2023, Allcock & Marcus has been providing owners, boards and property mangers with the opportunity to inquire whether they are on the Fannie Mae Blacklist and the basis they are on the list. We have also worked with many associations to get them off the Fannie Mae blacklist.
We are pleased to announce that Fannie Mae and Freddie Mac last week advised that they are going to provide the exact same service that Allcock & Marcus has been providing since May, 2023. Fannie and Freddie plan to implement this program in late February 2024. It is unclear at this time exactly what Fannie and Freddie’s system will look like, but we understand that they will allow for owners, boards, and authorized representatives of HOA’s and Condos to inquire whether they are on the Blacklist and the reasons for the same. Additionally, Fannie and Freddie are setting up an appeal process to allow condos and HOA’s to challenge their designation and/or basis for being on the list. We feel this is the most important aspect of Fannie and Freddie’s plans as it provides an actual opportunity to communicate with a person in these otherwise secretive government sponsored entities.
Jim Morrison a writer with the Boston Globe wrote a powerful piece on the existence if Blacklist. Dawn Bauman, head of Government Affairs for the Community Association Institute (National) was also instrumental in lobbying for Fanie and Freddie to make the list accessible. They were instrumental in getting the federal government to open up its Blacklist. Allcock & Marcus will continue to make the Blacklist available to owners, boards and property managers and will continue to work with community associations to get them off the list.
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