As of January 2022, Fannie Mae has updated its condo guidelines in the wake of the condominium collapse in Surfside Florida. Fannie Mae will no longer guarantee mortgages in condo complexes that have levied a special assessment to pay for deferred maintenance that affects a project’s structural integrity. The project will remain Fannie Mae ineligible until the required repairs have been made and documented.

HOA special assessments are extra fees that you may be charged by your HOA board under certain conditions, in addition to one’s regular monthly HOA dues. These costs are usually levied by the board only in emergencies, such as in the case of unexpected damage. But often times they are levied when there are not enough reserve funds to pay for deferred maintenance.

When HOAs create their budgets for the year, they decide how much homeowners will be charged in HOA dues throughout the year. The fees they opt to charge go toward planned maintenance, projects, operating expenses and other relevant community ventures. A good portion of the fee homeowners are charged also goes toward the HOA’s reserve fund, which is essentially a pool of money used to fund emergency repairs and other unforeseen expenses.

Sometimes, projects or situations might come up that drain the HOA’s reserve fund, causing special assessments to be charged to cover the remaining cost. This can be to fund anything from repairs to a new community pool that ended up costing more than the HOA planned for.

Once an HOA board decides it will be charging a special assessment for deferred maintenance, homeowners are required to pay it over some period of time. This is decided by the board and based on a variety of factors, including how much is being charged and how quickly the project that requires the funding will need to be completed.

Universal Capital Mortgage and Coast 2 Coast Funding Group are condominium specialists. As a direct lender, we can offer 30 year fixed conventional loans on condominium projects in CA and OR that have a special assessment for deferred maintenance. The loans are underwritten to the same guidelines that Fannie Mae uses and rates are only slightly higher.

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