Condos in disrepair across US revealed

“And the third aspect of it is really to enforce the gathering of information about these developments so they can compile the appropriate list which comes in the form of updated questionnaires specifically pertaining to structure, condominium and finances of a condominium development. Those are the three aspects of this new guidance. If you’re out of line with any of those, Fannie Mae is going to put you on this unavailable list that they created, and that’s what’s going to make major changes in the industry because nobody wants to be on that list.”

The granular level of detailed information now needed for mortgage financing will lay bare for condo owners their building’s state of disrepair, Tomaselli said. He predicted some may go into foreclosure as a result of the heightened requirements.

“I’ve seen projects in the past you couldn’t lend to,” he added. “Inevitably what happens is that values plummet and people start going into foreclosure for various reasons – they can’t make their mortgage payments, they can’t make the increased contributions for the repair work that needs to be done to the development – and once that starts to happen, when financing isn’t available in those sites, it just  leads homeowners  down this path of going into foreclosure.

“And the worst part about it is the people who bought those units had no clue because this information had never really been required before when a lender was providing mortgage financing. So, when you signed a contract to buy a unit, yeah, there was some due diligence that went on but not to this extreme. I think what’s going to happen is, for a lot of homeowners, they’re going to have a rude awakening their development isn’t structurally sound.”