A condominium in Surfside, Florida, partially collapsed on June 24, 2021, with 98 casualties and many people losing their homes. Investigations pointed out design failure, low-grade construction, and lack of adequate structure maintenance as the probable reasons for the collapse.
The tragedy also had a negative impact on companies that manage, finance, insure, and regulate condominium mortgages. It cautioned industries and stakeholders on the dangers of infrastructure and properties without NJ commercial building inspection and sufficient building maintenance. It also emphasized the significance of a structural engineer NJ and how their job is critical in maintaining the building’s safety.
Due to the Surfside condominium tragedy, the Federal National Mortgage Association (FNMA or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) released new mortgage requirements for condominiums. Freddie Mac and Fannie Mae are government-sponsored entities that serve as intermediaries between private lenders and security investors in the mortgage market.
Freddie Mac’s Bulletin 2021-38 issues review requirements for mortgages of condominiums and cooperative projects with five or more attached units that need critical repairs. It also covers projects with special assessments. The bulletin defines critical repairs as significantly impacting the building’s safety, soundness, structural integrity, or habitability. It also means those repairs and replacements that affect unit values and the project’s financial viability. Mortgages sought for condos and co-op projects that need significant repairs will be ineligible for sale to Freddie Mac.
Meanwhile, Fannie Mae’s Lender Letter (LL-2021-14) stated that they would no longer buy mortgages secured by condominium and co-op projects with deferred maintenance or receiving a directive because of unsafe building conditions. In the lender letter, significant deferred maintenance means that one would need a full or partial building evacuation for more than seven days to complete the required repairs for the building. It also encompasses defects, deficiencies, and damage that affect the usual function of the structure.
For more details about the Fannie Mae and Freddie Mac requirements, here is an infographic from Lockatong Engineering.
