Fannie Mae keeps secret “blacklist” of properties

UPDATED: April 17, 2023, 5 p.m. EDT
No one wants to be on a blacklist.

But that’s where a number of properties are finding themselves, as lending firm Fannie Mae has changed its criteria following the collapse of the Surfside, Florida, condominium in 2021, the Orange County Register reported.

Properties that haven’t kept up with maintenance or aren’t on firm financial footing have been put on a confidential list that only lenders and servicers have access to, according to the outlet.

That’s caught some would-be condo buyers and those looking to refinance their mortgages by surprise.

“It’s a crapshoot,” Orest Tomaselli, project review president for CondoTek, a company that provides documents and services to condo and co-op lenders, told the outlet. “The only way for you to find out if a (condo) project is on that list is if you apply for a mortgage and the lender runs that project to see if it’s unavailable. And only then, typically, is a buyer informed.”

The list, which stands at about 1,400 properties, is also growing, leaving some buyers or owners looking to refinance having to pay more in interest to get mortgages, if they can get them at all.

A spokesperson for the lender defended the list, saying it only affects less than 1 percent of properties.

“These measures help protect borrowers from physically unsafe or financially unstable (condo or co-op) projects,” a spokesperson said in an email to the outlet  

The Federal Housing Administration keeps a similar list of properties ineligible for FHA mortgages, but the list is public.

Real estate professionals say the Fannie Mae list should also be public.

“We think it would be a real benefit to the industry — not just servicers and lenders but also real estate agents or the HOAs,” Ken Fears, NAR’s director of conventional finance and valuation policy, told the outlet. “If there’s erroneous information about the property on this registry, there’s no way for an HOA or agent to know about it or to contest it, and that’s very problematic.”

— Ted Glanzer

Correction: A previous version of this article stated Freddie Mac also has a secret list. It does not.