Deferred maintenance in condo communities is causing Fannie Mae to blacklist them and to deem them ineligible for the most common conventional financing. In today’s volatile housing market, condo owners and prospective buyers face a new and often invisible hurdle: Fannie Mae’s “do not finance” list. Commonly referred to as the condo blacklist, this list includes thousands of condominium and co-op projects deemed ineligible for conventional financing backed by Fannie Mae. The implications are far-reaching, affecting property values, buyer accessibility, and the financial health of entire communities.
What is Deferred Maintenance?
Deferred maintenance refers to repairs or upkeep that have been postponed, often due to budget constraints or lack of urgency. While some issues may seem minor at first, they can snowball into serious structural or safety concerns. Think aging roofs, corroded plumbing, or deteriorating balconies—problems that compromise not just aesthetics, but the integrity of the building itself.
Fannie Mae now considers these issues a red flag. If a condo project shows signs of significant deferred maintenance, it may be deemed ineligible for conventional financing.
I recently had the experience of seeing a condo association (which I had thought was well run) lose its eligibility with Fannie Mae, because the reserve study referenced “critical repairs” which were then deferred for two years. As you can imagine, Fannie Mae thought – Either the repairs are critical or they aren’t. If they are, you can’t defer them for two years. Since the condo’s own reserve study said they were critical, Fannie Mae blacklisted the condo
What has Changed with Fannie Mae?
In recent years, Fannie Mae has tightened its condo project review requirements, and the ripple effects are being felt across the real estate market. The catalyst? A growing concern over significant deferred maintenance—issues that, if left unaddressed, could compromise the safety, soundness, or structural integrity of buildings.
Following the tragic Surfside condo collapse in 2021, Fannie Mae (and Freddie Mac) introduced temporary guidelines to assess the physical and financial health of condo and co-op projects. These have since evolved into permanent standards that lenders must follow when evaluating loan eligibility.
Key updates include:
Under the updated guidelines, lenders are required to dig deeper into a condo’s physical and financial health. This includes:
- Inspection reports from the past 3 years, including reserve studies and engineering assessments.
- Special assessments and repair directives issued by local authorities.
- Unfunded repairs exceeding $10,000 per unit, which automatically disqualify the project.
- Board meeting minutes, budgets, and documentation of repair plans.
Projects with mold, water intrusion, structural deterioration, or evacuation orders are considered high-risk and may be added to Fannie Mae’s “Unavailable” list.
Deferred Maintenance isn’t the Only Way to Get Blacklisted
Fannie Mae evaluates condo projects based on a range of criteria. Properties may be deemed ineligible due to:
- Structural or safety concerns
- Insufficient reserve funds
- Pending litigation
- High investor ownership
- Non-compliant insurance policies
- Deferred maintenance or critical repairs
Once flagged, these properties become nearly impossible to finance through conventional means, forcing buyers into cash-only deals or alternative loans with higher interest rates.
The Fallout: How It Affects Buyers and Sellers
These changes have real consequences:
- Buyers may struggle to secure financing for units in older or poorly maintained buildings.
- Sellers may see property values drop if their building is blacklisted. When you can’t sell your property, your life is potentially on hold. As I keep saying – Imagine if you were just voted off the island, but there is no way off the island!
- HOAs face pressure to increase reserves and complete repairs to maintain loan eligibility.
In some cases, even isolated issues—like a single building with a failing roof—can jeopardize financing for the entire condo community.
Current Statistics – How Many Condos Are Blacklisted
As of July 2025, the number of condo projects on Fannie Mae’s ineligible list has surged to 5,175 properties2. This marks a dramatic increase from just a few hundred prior to the Surfside condo collapse in 2021, which triggered heightened scrutiny of building safety and financial stability.
States Most Affected:
- Florida: Over 1,400 developments flagged
- California
- Colorado
- Hawaii
- Texas
- Georgia
- New Jersey
- South Carolina
- Illinois
- New York
These states are particularly vulnerable due to aging infrastructure, rising insurance costs, and increased exposure to natural disasters
What This Means for Buyers and Sellers
For sellers, being on the blacklist can mean slashed listing prices and limited buyer interest. For buyers, it can mean denied mortgage applications and fewer financing options. In one case, a condo owner in Dallas had to drop his listing price by nearly $70,000 to attract a cash buyer after a mortgage was denied due to insurance issues.
If you are an all cash buyer planning to buy a condo, ask your Realtor to confirm that that condo is not on the ineligible list with Fannie Mae. You might not be financing your purchase, but you don’t want to make a bad decision.
What Can You Do?
- Check your condo’s status: Use Fannie Mae’s Condo Project Manager or consult your lender.
- Review HOA financials: Ensure adequate reserves and maintenance plans.
- Explore alternative financing: FHA, VA, or portfolio loans may be viable options. NB. Portfolio loans are generally not available when Fannie Mae has blacklisted a condo community for structural issues and deferred maintenance.
- Advocate for transparency: Push your HOA to address issues proactively and communicate with residents.
What Condo Boards and Associations Must Do
To stay ahead of the curve, associations should:
- Conduct regular inspections and reserve studies.
- Budget at least 10% of annual income toward reserves, as required by Fannie Mae.
- Be transparent with lenders, providing complete and accurate documentation.
- Prioritize repairs that impact safety, soundness, or habitability.
Boards that fail to act risk turning their communities into cash-only markets, limiting buyer pools and depressing home values.
The message is clear: safe, well-maintained buildings are the only ones that qualify for conventional financing. And that’s a standard worth striving for.
If you’re a condo owner or board member, now’s the time to review your building’s maintenance plan and financials. The future of your property—and its marketability—may depend on it.
If you have questions about condos for sale in the DC area, particularly in Montgomery County, let’s talk. You can reach me at lise@lisehowe.com or call me at 240-401-5577. I am very familiar with the condos in Montgomery County – and which ones are on the ineligible list. Suddenly, your decisions are about more than just whether the community is pet friendly or has washers and dryers in the units.
The most important question to answer is whether that condo community is on the blacklist. If it is, you want to proceed cautiously. That condo association is dealing with significant issues – whether it is deferred maintenance or insufficient insurance or a massive litigation. You want to proceed with caution!