Fannie Mae, officially the Federal National Mortgage Association, possesses a discreet and expanding nationwide roster of condominium properties, known as a blacklist, where it refuses to acquire mortgages. The affected developments are not notified of their inclusion in this list, which lenders access through a Fannie Mae tool. In order to maintain confidentiality, Fannie Mae obliges lenders to keep this information undisclosed. A prominently highlighted notice at the top of the list emphasizes its confidentiality, stating, “Fannie Mae Confidential and Proprietary — Subject to Non-Disclosure Obligations.”

This lack of transparency raises concerns for sellers and buyers alike. Fannie Mae and its counterpart, Freddie Mac, play a pivotal role in the mortgage market by purchasing, packaging, and selling home mortgages to investors, enabling borrowers with lower incomes and credit scores to obtain loans. Oversight is provided by the Federal Housing Finance Agency.

Together, Fannie Mae and Freddie Mac support a significant portion of the mortgage market, as reported by the National Association of Realtors, making it crucial for buyers to secure loans for properties outside Fannie Mae’s purview, potentially leading to increased costs for vulnerable individuals in the housing market. The number of developments on Fannie Mae’s blacklist has grown, with the August “Condo Unavailable Projects & Phases Report” citing various reasons for inclusion, such as deferred maintenance and water infiltration causing deterioration. The list, which was at 1,770 in May, increased to 2,001 in August and further to 2,306 by October, with Massachusetts accounting for 1.6 percent.

Orest Tomaselli, President of Project Review for Condotek, attributes this surge in blacklisted properties to changes in eligibility requirements following the Surfside tragedy. Condominium developments pose distinct risks to mortgage lenders, including commercial components, insufficient owner-occupied units, litigation involvement, or numerous delinquent fee payments. Prospective buyers seeking Fannie Mae or Freddie Mac-backed loans undergo scrutiny based on responses to questionnaires sent to property managers or condominium boards. Associations finding themselves on the blacklist can seek removal by providing sufficient documentation to Fannie Mae.

Critics argue that the secrecy surrounding this list disadvantages consumers, hindering their ability to sell or refinance homes without explanation. Suggestions have been made for Fannie Mae to notify property managers or associations upon blacklisting and for greater transparency in sharing this information with the public.