Jeff and Melaina Brill will long remember February 2023 as the month they went through a complicated pregnancy and a hellish home sale at the same time.
In the end, their new baby girl and their escrow both turned out fine.
Their daughter, Aurora, was delivered by C-section on March 2. Three and a half hours later, they got a text saying the two-bedroom condo the family of five had outgrown had been sold as well.
“(The sale) seemed like a shoo-in, and we were on the edge of celebrating when we started getting messages from the Realtor that there’s some kind of problem with the building,” Jeff Brill said. “My wife was already concerned about the pregnancy situation. Now we’re adding to the stress of ‘do we sell this place or not?’ ”
Unbeknownst to the Brills, their real estate agent or their homeowners’ association, mortgage giant Fannie Mae had put their building, the Harbor Lofts condominiums in downtown Anaheim, on a secret list of condos ineligible for Fannie-backed mortgages.
They didn’t find out about it until their buyers applied for a loan near the end of a three-week escrow.
All over America, condo buyers and sellers have been getting similar surprises.
In response to the Surfside, Fla., condo collapse that killed 98 people and caused more than $1 billion in property losses, conventional lending giants Fannie Mae and Freddie Mac drafted new lending standards last year to weed out condos and co-ops with deferred maintenance, structural safety issues or shaky finances.
As a result, a growing number of complexes wound up on what some call Fannie Mae’s “blacklist.”
Many, like the Harbor Lofts, got put on the list because of construction defect litigation between the owners and the builder. In February, residents of 6,102 condos at Laguna Woods Village learned their homes were added to the list because their HOA’s insurance is insufficient.
But it’s hard to know that a building is on the list, let alone why it…
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