Secret mortgage blacklist hinders Florida condo sales

A secret mortgage blacklist is causing problems for many condo owners in the U.S. This list, created by mortgage underwriters like Fannie Mae, has grown significantly since the Surfside Condo collapse in 2021, which resulted in 98 deaths. This incident highlighted serious issues with underinsured buildings across the country. When a condo building is added to the blacklist, it becomes difficult for potential buyers to secure a Fannie Mae-backed mortgage. As a result, sellers of these blacklisted condos find themselves unable to sell their properties. This situation is leading to a surplus of unsold condos, which is driving prices down. Currently, there are 5,175 buildings on the blacklist, a jump from just a few hundred before the Surfside incident. Florida has the highest number of blacklisted buildings at 1,400. Other states like California, Colorado, Hawaii, and Texas also have notable figures due to natural disasters and extreme weather. Fannie Mae and its partner Freddie Mac do not lend money directly but buy and sell about half of U.S. home loans. They have raised insurance requirements for condos to ensure that mortgage debts can be paid if properties are damaged. As insurance costs rise due to climate-related risks, many condo associations are downsizing their coverage. This move makes their buildings ineligible for Fannie Mae and Freddie Mac-backed loans. A spokesperson for Fannie Mae stated that their requirements aim to protect borrowers from unsafe or financially unstable buildings. Meanwhile, Freddie Mac does not maintain its own blacklist.