Recently we talked about how Fannie Mae came out with guidance that will temporarily make FNMA mortgage loans in condominium and co-op buildings that are facing “significant deferred maintenance” ineligible for purchase beginning January 1, 2022. Unfortunately, many condo and co-op buildings in existence today are facing long-term maintenance deferment.
Board members struggle to balance the needs of the community at large, the physical needs of the structure, and the individual homeowner needs. Sometimes this balance works out, but more often than not, the homeowners win out, and keeping their assessments low becomes the top priority. So reserves likely stay lean, and some maintenance gets shrugged off for an extra year, or two, or three. And sometimes, this works out, too. But when it doesn’t, it can be catastrophic.
In the wake of the Surfside condo collapse in Miami in 2021, FNMA rolled out these new restrictions on the eligibility of your community for Fannie Mae loans. Community Association Institute (CAI) conducted extensive research into the reality of maintenance in community associations. This conversation is rocking the industry not only because of the tragedy that occurred but how close so many other buildings likely are to tragedy as well.
If your community is behind on its maintenance needs, and staring down hefty capital expenses to fix the situation, it may be time to consider alternative funding options. Yes, you could issue a special assessment. But that only solves half of the problem. Right now, buildings in need of heavy maintenance effectively cannot sell their units, trapping homeowners and disrupting the community. Special assessments to the tune of tens or hundreds of thousands of dollars, whether all at once or over the course of several years, create a nearly identical problem.
A community association loan from NCB could be the solution for you. Borrowing allows boards to immediately secure the funding they need to make large repairs--no waiting for months or years to properly fund reserves, or issuing costly special assessments to homeowners who already feel they’re paying too much. Click here to learn more about the solutions NCB has to offer your community.