Let’s talk about what really happened to condos after 2021, because most people still don’t understand why deals are suddenly dying.
In June 2021, the tragedy at the Champlain Towers South in Surfside, Florida changed everything.
It exposed:
• Deferred maintenance
• Underfunded reserves
• Structural safety gaps
• Insurance weaknesses
That single event sent shockwaves through the entire condo financing system.
By December 2021, Fannie Mae issued updated condo project review requirements.
On January 1, 2022, those rules officially went into effect.
On February 28, 2022, Freddie Mac followed with similar tightened standards.
And that’s when everything quietly changed.
Before 2022
• Condo questionnaires were lighter
• Insurance gaps were often overlooked
• Deferred maintenance wasn’t deeply scrutinized
After 2022
Lenders must now confirm:
• No significant deferred maintenance
• Adequate reserves
• No structural safety issues
• Full replacement cost insurance adequacy *
• Disclosure of inspections and planned repairs
Anything that signals future assessment risk can make an entire project ineligible.
And here’s where real life hits.
Because a few remaining buildings in Windsor NJ, still have building with older roofs, and those roofs are not covered under full replacement cost with their insurance, the HOA is now considered unwarrantable.
My buyer cannot get conventional financing. A qualified buyer with a 40% down payment, no debt, excellent credit, stable great income, now can’t get conventional financing!
Even non-warrantable lenders are stepping back because they see the risk of not an easy sale— if it’s hard to finance today, it’s hard to exit tomorrow.
The HOA restricts renting.
So there’s no rental fallback.
…and after even MY INCREDIBLE efforts to move mountains, Our deal is dead.
This is why I wanted to understand what the heck has changed and why.
So, it’s not because the buyer isn’t qualified.
Not because the unit isn’t beautiful.
Not because anyone did anything wrong.
But because the whole system tightened.
Why?
• Mortgage underwriting tightened (2022)
• Insurance underwriting tightened (2021-present)
• Reinsurance markets hardened
• Some states increased reserve requirements
• Lenders became far more conservative
But here’s the real issue. Every entity is just doing what they think is best.
No single entity is managing this transition which I foresee will drastically affect the market value of these communities because no one can easily exit when they want.
Right now HOAs are operating under:
• State condo statutes
• Insurance market forces
• GSE mortgage rules
• Local volunteer board politics
Those four systems are not aligned to keep units warrantable.
That’s the friction we’re experiencing.
• HOAs are state-governed.
• Fannie and Freddie regulate loans not buildings.
• Insurance is state-regulated.
• Boards are volunteer-run.
There is no central authority coordinating all three layers.
So tightening happens in pieces.
And homeowners get caught in the middle.
This is not about blame.
It’s about understanding the landscape we’re operating in now.
If you own in a condo community, reserve strength, insurance structure, and capital planning are no longer “nice to have.”
They directly affect liquidity!
And liquidity affects value. So for this community, value will be affected until another 2 years when all the remaining roofs are completed.
We are in a new era.
And if we don’t adapt strategically, more deals will quietly die. If HOAs recognize that it does affect their market value as a whole which they have a duty to uphold, then they will figure out a way to resume warrantability asap not wait until their community reputation erodes.
That’s what happened here. Even though we realize our deal is dead, I sent a constructive email to make all aware of the probably repercussions to their community.
My client was the buyer here. I feel sorry also for the seller who is stuck with a vacant unit they are not even allowed to rent out.
They can hope for an all cash buyer, but would an all cash buyer want to deal with an unwarrantable unit and future reasons for illiquidity ?
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If you or someone you know is navigating real estate, let’s talk confidentially. You don’t have to go through this alone.
Call or Text Joanna Renner: (646) 296-6864
Email: [email protected]
Your next chapter begins with clarity. Whether you’re letting go of the past or stepping into something new, know this:
A home is not just a building — it’s a foundation. Let’s build yours, with dignity.
Very Truly Yours,
Joanna Renner,
646-296-6864
