Fannie Mae and Freddie Mac Tighten Condo Financing Rules Through 2027

Yahoo Finance··US·Read original
3▲0 ▼1Impact / 5
Summary · why it matters

Fannie Mae and Freddie Mac are tightening their standards for acceptable condo financing, changes that take effect between now and early 2027 and could further complicate an already struggling condo market. The mortgage giants, which support about 70% of the mortgage market, eliminated "limited reviews" last month in favor of closer reviews for all but the smallest buildings, and starting in January they will require condo associations to allocate at least 15% of their assessment income toward reserves, up from 10% today. The changes are part of an ongoing effort to improve condo safety after the deadly collapse of an aging building in Surfside, Fla., in 2021, but they add a new roadblock to a market already seeing slumping prices, growing supply, and buyer skepticism toward special assessments and monthly fees. Nationally, condo prices have fallen 2% from peak prices a few years earlier, according to Zillow data, with far steeper drops in some markets: Punta Gorda, Fla., is down 35% from its September 2022 peak, Tampa has seen a 24% decline, the median condo in Austin, Texas, is down 28%, and prices in Denver and Raleigh have fallen more than 16%. Condo sales were down 2.7% in August compared to a year earlier, according to National Association of Realtors data, while single-family home sales saw a smaller 1.1% drop, and nationwide condo supply sits at 6.6 months versus a more balanced 4.7 months for single-family homes. Agents and lenders told Yahoo Finance that the key for buyers and sellers is to learn about the HOA and gather necessary paperwork as early as possible, with Realtor Justyn LeFebvre of Christie's International Real Estate in Austin noting that the biggest bottleneck is the HOAs themselves producing these studies.

Impact on assets 4

Financials▲ · 3 stocks
Freddie Mac
0IKZ
± MixedRegulationrelevance

Freddie Mac is tightening condo financing standards (eliminating limited reviews, raising reserve requirements), a regulatory change it is implementing.

Fannie Mae
0IL0
± MixedRegulationrelevance

Fannie Mae is tightening condo financing standards (eliminating limited reviews, raising reserve requirements), a regulatory change it is implementing.

Real Estate▼ · 1 stocks
Zillow Group Inc Class C
Z
▼ NegativeDemandrelevance

Condo market slump and tighter financing rules weigh on Zillow's condo listing/transaction activity, with Zillow data cited showing falling condo prices.

Off-coverage companies 1

Christie's International Real EstatePrivate± Mixed
relevance

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