Condominium listings across Southern California are soaring — but so are the number of complexes “blacklisted” against loans by Fannie Mae. The No. 1 on the list: Los Angeles.
The federally sponsored mortgage financing firm has included 438 condominium complexes across a five-county region in its do-not-lend “blacklist,” the Orange County Register reported, citing figures from what’s officially known as the Federal National Mortgage Association.
The blacklist is Fannie’s secret report of condo complexes ineligible for Fannie-backed mortgages, which limits financing options and makes it harder for potential buyers to get a mortgage loan.
A complex may end up on the notorious list if it doesn’t meet Fannie’s financial and operational stability standards, which include condo homeowner associations that may lack adequate property insurance, or need to make critical repairs.
If a complex fails to meet the standards, it lands on Fannie’s growing blacklist. Freddie Mac has similar guidelines, but doesn’t keep such a list.
The mortgage blacklist has left homeowners stuck with unsellable condos, according to the Wall Street Journal. Nationwide, 5,191 condo complexes out of 150,000 complexes nationwide were blacklisted, or 3.5 percent of all condos.
The blacklist has ballooned across SoCal, which contains 64 percent of the 685 blackwashed complexes across the state.
Of the 438 Southland complexes shunned by Fannie, the lion’s share are in Los Angeles County, with 237. San Diego County has 98, Orange County 70, Riverside County 19 and San Bernardino County 14.
Fannie and sister organization Freddie don’t make loans, but buy roughly half of the country’s home loans from lenders and package them to sell to investors, then guarantee payments on them, according to the Wall Street Journal.
Loans that meet their underwriting standards can be cheaper, and require lower down payments than bespoke mortgages.
Across Southern California, condos have often served as an entry point to home ownership. Condo listings across the region jumped 61.8 percent this month to 7,781 units, compared with 4,809 a year ago, according to the Register.
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