UPDATED FANNIE MAE AND FREDDIE MAC LENDING QUESTIONNAIRES IMPACT HOMEBUYERS, CAUSING POTENTIAL DISRUPTION TO U.S. AFFORDABLE HOUSING MARKET
CAI publishes preliminary research and new resources to support community associations navigating the lending questionnaires.
Mar. 2, 2022 — Falls Church, Va. — Updated lending questionnaires from Fannie Mae and Freddie Mac introduced in late 2021 are creating questions and concerns for millions of homebuyers, condominium communities, and housing cooperatives, causing a potential disruption to the U.S. affordable housing market, according to Community Associations Institute (CAI), the leading international authority on the community association housing model.
“While we recognize Fannie Mae and Freddie Mac's new lending questionnaires are designed to address building safety and structural stability following the partial collapse of Champlain Towers South condominium in Surfside, Fla., the short timeframe of implementation and updated lender questionnaires have caught many homebuyers, condominiums, coops, and housing stakeholders by surprise," says Dawn M. Bauman, CAE, CAI's senior vice president of government and public affairs. “Our preliminary research shows how our nation's condo market, traditionally a first-time homeownership and senior citizen housing option for many buyers, is shrinking. When you restrict the opportunity to purchase a home, you open the door for essential housing stock to be scooped up by investors, the only buyers able to pay all cash for the purchase."
On Feb. 17, CAI sent a letter to the Federal Housing Finance Agency, requesting that implementation of the temporary guidelines be suspended at least for one year. CAI supports and advocates on behalf of its nearly 43,000 members and the 74.1 million Americans living in community associations, commonly known as condominiums, homeowners associations, and housing cooperatives.
A recent survey of CAI members shows that creditworthy borrowers have been denied credit to purchase homes and refinance mortgages in condominium and cooperative projects with no safety, soundness, structural integrity, or habitability concerns because of the temporary guidelines from Fannie Mae and Freddie Mac. The majority (60%) of respondents identified as community association managers or board members working with condominiums and homeowners associations. Based on the results:
§ 83% say they have been presented a lender questionnaire including the new Fannie Mae and Freddie Mac guidelines.
§ 35% report a delay in lender approval.
§ 27% note they have experienced loans denied due to the questions not being answered (not structural integrity concerns).
§ 77% say they feel exposure to liability for answering questions that are 'beyond my knowledge and expertise.'
The second part of the research includes data from community association management companies representing nearly 1,000 condominium homes across the country. In that survey, the overwhelming majority (96%) of respondents say they have been presented a lender questionnaire including the new Fannie Mae and Freddie Mac guidelines. In addition:
§ Nearly half (48%) say they've experienced a delay in lender approval.
§ 26% have experienced loan denials due to questions being unanswered (not structural integrity concerns).
§ 88% say that they feel exposure to liability for answering questions that are 'beyond my knowledge and expertise.'
CAI continues to engage in conversations with Fannie Mae and Freddie Mac representatives, real estate agents, mortgage bankers, and others to help avoid a regulatory bottleneck and loss of capital and liquidity to the condominium and housing cooperative mortgage market. To support homebuyers, community association managers, board members, and housing stakeholders, CAI created the Guidance Document on Fannie Mae and Freddie Mac's 2021 Condo Requirements, available to download here.
Download CAI's Condominium Safety Public Policy Report and other resources related to condominium structural integrity, maintenance, and reserves at www.caionline.org/condosafety.
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About Community Associations Institute
Since 1973, Community Associations Institute (CAI) has been the leading provider of resources and information for homeowners, volunteer board leaders, professional managers, and business professionals in the more than 355,000 homeowners associations, condominiums, and housing cooperatives in the United States and millions of communities worldwide. With more than nearly 43,000 members, CAI works in partnership with 36 legislative action committees and 63 affiliated chapters within the U.S., Canada, South Africa, and the United Arab Emirates as well as with housing leaders in several other countries, including Australia, Spain, and the United Kingdom. A global nonprofit 501(c)(6) organization, CAI is the foremost authority in community association management, governance, education, and advocacy. Our mission is to inspire professionalism, effective leadership, and responsible citizenship—ideals reflected in community associations that are preferred places to call home. Visit us at www.caionline.org, and follow us on Twitter and Facebook @CAISocial.