How Fannie Mae and Freddie Mac Evaluate Florida Condos

Fannie Mae's PERS (Project Eligibility Review Service) and Freddie Mac's equivalent process evaluate condos for inclusion in their backed loan programs. Post-Surfside, both agencies issued updated guidance specifically addressing Florida high-rise condo risk. Disqualifying conditions now include: • Significant deferred maintenance: visible physical deterioration of structural components • Inadequate reserves: reserves significantly below SIRS-required levels without a credible funding plan • Required structural inspections or repairs not completed: buildings with outstanding milestone inspection requirements or identified repairs not addressed • Special assessments that affect financial stability: large outstanding special assessments that owners are unable to pay, creating delinquency • HOA delinquency above 15%: when more than 15% of unit owners are 60+ days delinquent on HOA dues • Active litigation affecting >20% of units or association financial stability • Inadequate insurance coverage

The Effect of Ineligibility on Pricing and Buyers

When a Florida condo becomes ineligible for Fannie/Freddie financing: • The buyer pool shrinks dramatically. Buyers who need conforming financing ($806,500 or below loan amount, conventional terms) cannot purchase. • Remaining buyers: all-cash buyers, and buyers who can obtain jumbo portfolio loans from private banks and credit unions that conduct their own underwriting. • Jumbo lenders also apply their own condo eligibility criteria. Many have added SIRS compliance and reserve adequacy checks. An ineligible-for-Fannie condo may also be ineligible for jumbo financing. • Price impact: significant reduction in buyer competition typically pushes prices down 10–30% below comparable eligible condos in the same building or market. This price decline can look like a "deal" to an unsuspecting buyer. A $600,000 condo priced at $450,000 because it can't be financed is not a deal if the $150,000 discount is less than the pending special assessments or the structural issues that made it ineligible.

How to Check Lender Eligibility Before Going Under Contract

The critical step: check lender eligibility BEFORE making any offer or, at minimum, as one of the first due diligence items once under contract. Fannie Mae lookup: Fannie Mae maintains a "Condo Project Manager" (CPM) database. Search by project address or project name at the Fannie Mae website. Some projects have PERS approvals; others are on watch lists or have previous denials. Ask your lender first: the fastest route is to ask your mortgage lender to run a condo eligibility check on the specific building before you write an offer. Many lenders can do this quickly and will flag known issues. Request the HOA certification: when you formally apply for a condo loan, the lender sends an HOA certification form to the association asking them to certify compliance with lender eligibility criteria. The responses to this form reveal any eligibility issues. For cash buyers: even if you're purchasing with cash and don't need lender eligibility, you should understand it. Lender ineligibility affects your eventual resale market and price. Buying an ineligible condo limits you to cash buyers and portfolio loan buyers when you sell.

“Lender eligibility is one of the most important — and most overlooked — due diligence items for Florida condo buyers. I have seen buyers under contract on condos where they had already invested thousands in inspections and closing costs before discovering the building was on Fannie Mae's restricted list. That discovery came from the lender's underwriter, at which point the buyer had to either find a portfolio lender (more expensive) or walk away and lose their due diligence costs. The conversation should happen before the offer.”

— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®

• FL Condo Assessment Guide (Hub)
• HB 1021 Reform: What It Requires
• Buying a FL Condo Now: Checklist
• Reserve Studies Explained
• Milestone Inspections
• Special Assessment Risk for Buyers
• FL Condo Insurance Crisis

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