Aging infrastructures and properties without commercial building inspection NJ can be dangerous, such as the partial collapse of a condominium in Surfside, Florida, on June 24, 2021, that led to 98 deaths and many people losing their homes. The cause of the collapse pointed to design failure, poor construction, and inadequate maintenance, which highlighted the significance of an NJ structural engineer in maintaining a building’s safety.

The tragedy also affected companies that manage, finance, and insure condominium mortgages. Government-sponsored entities Federal National Mortgage Association (FNMA or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) released bulletins about new mortgage requirements for condominiums. These government-sponsored entities are part of the secondary mortgage market that sets the standards for loans and mortgages, influencing the customers’ borrowing terms. 

Freddie Mac’s Bulletin 2021-38 issues review requirements for condominiums and cooperative projects with special assessments and critical repairs that can significantly impact the building’s safety, soundness, habitability, or structural integrity. It covers the needed improvements and replacements that can affect unit values and the project’s financial viability. 

According to Freddie Mac’s bulletin, mortgages sought for condo and coop projects with critical repairs will be ineligible for sale to Freddie Mac. A project is also ineligible for sale if it receives a special assessment because of needed repairs.

Meanwhile, Fannie Mae’s Lender Letter (LL-2021-14) stated that they would no longer buy loans secured by condo and co-op projects with significant deferred maintenance. Additionally, they would no longer approve those that received a directive to make repairs due to unsafe conditions. The letter also specified that projects are ineligible for loans if they cannot secure a certificate of occupancy or if they did not pass a regulatory inspection or recertification such as those conducted by the New Jersey Department of Community Affairs.

For more details about the Freddie Mac and Fannie Mae requirements for the safety of the building’s structure, here is an infographic from Lockatong Engineering.