Surfside Condominium Tragedy Results in Stricter Fannie Mae and Freddie Mac Requirements
Ninety-eight people lost their lives, and dozens more were left homeless when the Champlain Towers South in Surfside, Florida, partially collapsed on June 24, 2021. One of the causes of the catastrophe, according to experts and a general contractor from the Miami Herald, was poor design and inadequate construction.
On June 26, 2021, Surfside officials released a 2018 report revealing that the property’s pool deck and basement parking area had already suffered significant structural damage. But owners continued to put off making the necessary structural repairs, only doing minor surface repairs that covered up damage with layers of concrete, pavers, and tiles.
The tragedy cautions stakeholders about the dangers of outdated and structurally deficient infrastructure and homes. It also made federal home mortgage companies Fannie Mae and Freddie Mac wary of loans tied to properties with significant structural and safety problems. So they published new guidelines designed to raise the standard for mortgaged properties. These provisions will also aid in averting property catastrophes and their ensuing effects on the financial sector.
Freddie Mac and Fannie Mae set a standard for condominium loans and mortgages. These entities do not interact with customers directly, but they provide lending requirements that ultimately affect customer borrowing conditions. Their guidelines aid in defending the industry and its players from high-risk mortgages.
However, the issuance of these new guidelines means added difficulty for community associations and cooperatives when applying for loans. Through a property condition assessment NJ, they must first determine whether the building is free from defects, substantial damage, and deferred maintenance. Getting the assistance of a NJ structural engineer can assist them in performing their due diligence and in complying with various requirements.
Here is an infographic by Lockatong Engineering discussing the Surfside condominium tragedy and its impact on Fannie Mae and Freddie Mac’s requirements.
