Nearly 700 condominium complexes around California have been placed on a “mortgage blacklist” that has created a headache for owners looking to sell their properties and, in many cases, forced them to lower their asking price.
The list — reported on by The Orange County Register in 2023 — is maintained by Fannie Mae, a government-sponsored entity that doesn’t issue loans itself, but with its sister company Freddie Mac buys up nearly half of all home loans and bundles them to sell to investors.
Inclusion on the blacklist can make it nearly impossible for buyers to get a conventional loan — the kind that Fannie buys and guarantees, which tend to be cheaper than other mortgages and require lower down payments.
Fannie’s list has been growing in recent years, as it looks to protect itself from taking on mortgages for properties that it considers to be underinsured, dilapidated, or lacking sufficient reserves.
Also see: Buying a condo? Fannie Mae blacklist has 438 Southern California communities
In January 2024, business screeched to a half for real estate agent Larry Spiteri when Fannie Mae blacklisted the majority of units in Rossmoor, an upscale retirement community of 6,700 homes in Contra Costa County.
“For a while there, we were in a panic — no one was lending,” said Spiteri, who specializes in the area. With no lenders offering qualified mortgages, the only people selling were those who could find a cash buyer. With the buyer pool reduced, home values in the community fell temporarily, he said.
In May 2024, local mortgage broker Mary Niles found alternative lenders willing to offer mortgages to Rossmoor condo buyers — what are called “non-qualified mortgages,” or “non-QM loans,” which typically come with somewhat higher down payment requirements and interest rates. Since then, she’s also found a lender for co-ops, and has closed about 30 loans for buyers in the community.
“Sales have been picking back up again, as well as prices,”…
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