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CathyA3 (Ohio)
Posts: 6,299
Posted:
Fannie Mae and Freddie Mac have issued new temporary requirements to mitigate the risk for underwriting mortgage loans for buyers in community associations.

The New Fannie Mae and Freddie Mac Lender Questionnaire

Why this is an issue: the new guidelines require lenders to to get answers to questions about things like building soundness and structural integrity - things that board members and property managers will not have the expertise to answer. At the very least, they would have to hire pros to provide those answers - and depending on how in-depth the questions are, this could be a significant expense. (I assume that the questions are in-depth, otherwise the questionnaire wouldn't do what it is intended to do.)

The article points out that communities are not all the same, and it makes little sense to apply the same requirements to a 10-year-old community of ranch-style condos and to a 40-year-old high rise. I also wonder how effective "temporary" requirements will be.

MaxB4
Posts: 3,513
Posted:
Here is the Fannie Mae form

https://gmfspartners.com/new-fannie-mae-form-1076-condo-project-questionnaire/
PatJ1 (North Carolina)
Posts: 568
Posted:
Thank you for posting this.

CAI's link to this PDF report is not operational. It shows the report as a download on this page:

https://www.caionline.org/HomeownerLeaders/DisasterResources/Pages/CONDO-SAFETY-Structural-Integrity,-Maintenance,-&-Reserves.aspx

But does not download a pdf.

AugustinD
Posts: 3,698
Posted:
The law firm ("Becker") that wrote the piece that CathyA3 cites above is the same law firm that, as of a week or so ago, will be paying $31 million to the Surfside survivors.

Excerpts from a Sep 2021 report on the Becker law firm:

Becker attorneys have represented the Champlain Towers South Condominium, on and off, for over 30 years, including two instances when the condo underwent significant renovations.

The firm has marshalled its condo clientele to deliver torrents of “grassroots” attacks on legislation that could have made condos safer.

As elected officials across the state debate potentially costly new regulations to make condos safer, Becker is sure to exert influence. The firm says it represents more than 4,000 condo buildings in Florida. It has lobbying agreements with city and county governments throughout the state. One of its attorneys, Joseph Adams, sits on the Florida Bar’s Real Property, Probate and Trust Law task force advising the governor and Legislature on what should be done to prevent another condo collapse.

“They’re the ocean liner among [homeowner association] and condo attorneys. They’re not the little tugboat,” said attorney Fred O’Neal, an attorney in Windermere in central Florida who represents homeowners against associations. “In Tallahassee, the Legislature obviously bends to the will of the best organized, loudest voices.”

Prompted by the firm, retirees have asked legislators for mercy from new laws that might increase condo fees, like a requirement to add fire sprinklers. Former legislators said condo residents didn’t necessarily know what the legislation was about — just that it might cost them something.

Yet the Becker lobbying arm founded by Berger — the Community Association Leadership Lobby (CALL) — fought reforms aimed at making reserve funding mandatory, former state Sen. Steve Geller said.

“Becker & Poliakoff opposed it. They organized their condos against it,” said Geller, now Broward County mayor. “Probably because that’s what their condos wanted them to do. … They were not the only one, but Becker was the biggest.”

When the Legislature thought it was a good idea for condos to install fire sprinklers, Becker sought to neuter the law. It passed 21 years ago, but thanks in part to Becker, the law still doesn’t apply to older condos like the ones lining South Florida’s coast.

Becker unleashed a torrent of opposition.

Former Rep. Robaina wrung his hands in late June, when the Champlain collapsed in Surfside, wondering if his failed proposals would have saved 98 lives.

He told the Sun Sentinel that Becker’s firm stymied his efforts to pass a bill requiring coastal condo safety certifications every 10 years. Currently Broward and Miami-Dade counties require inspections 40 years after construction, and every 10 years thereafter.

“That bill never even moved, there was no support from the House, and it wasn’t just Becker & Poliakoff, but other law firms, saying there was an undue burden financially on the associations,” Robaina said.

Pete Dunbar, an influential longtime lobbyist for the Florida Bar and an adjunct professor at Florida State University College of Law, said the Becker firm is by no means alone in advancing condo issues, but is a respected member of the condo “gaggle’' in the state Capitol.

“My experience is they have always been a respected voice in this dialogue. I don’t know that anybody is overriding in their influence,” he said. “It takes reaching consensus among those respected voices.”

When Robaina in 2008 proposed that condos be inspected every five years so that reserve funds could be properly estimated, Becker took credit for nullifying the law.

Becker’s main condo lobbyist at the time, Yeline Goin, got the bill amended so that condos could opt out, the Sun Sentinel reported at the time.

The entire requirement was repealed two years later.

“That was done by the law firm of Becker & Poliakoff, I’m sure, because they were the ones that lobbied against everything I ever did,” Robaina told the Sun Sentinel recently.

Robaina suspects the firm will be active in the legislative scramble triggered by the Surfside collapse.


More at (see https://www.sun-sentinel.com/news/fl-ne-surfside-collapse-condo-becker-20210928-oa5xaboljrfcxaptqslzujfita-story.html):

From the OP's linked article:
Many may wonder why this a big deal, especially if they believe their association is maintained properly. While that may be the case, the new guidelines now require lenders to obtain written answers to questions concerning building safety, soundness, structural integrity, and habitability, which were never part of previous lender questionnaires. Most of these questions cannot be answered by the association since the board and its manager are simply not qualified to give such an opinion, meaning they lack the requisite legal and engineering expertise.

And you, Becker law firm, are opposed to anything that might make condos safer. The battle to change the Fannie Mae / Freddie Mac questionnaire will earn Becker millions, or tens of millions, of dollars. With 4000 Florida condo clients, at say $10,000 of legal fees a year, Becker makes $40,000,000 per year from the Florida condo community. Stir up sh-t. Promote conflict. Make more money.
AugustinD
Posts: 3,698
Posted:
From another law firm, what seems like a more thoughtful piece:

https://www.clemonslaw.com/hoa-condominium-law/condominium-mortgage-underwriting-the-lending-industrys-response-to-the-champlain-towers-tragedy/

Notable excerpt (conflicting with what the Becker law firm above asserts):

For well-run, professionally managed associations, answering these questions should not present a significant burden. ... associations which periodically work with engineers and inspectors to update their reserve studies should have little to fear; for them, a mortgage questionnaire is not likely to be the trigger for new concerns over safety or structural issues. For associations with outdated reserve or engineering studies, the time to have them renewed is now.

LoriM15 (Florida)
Posts: 1,009
Posted:
Quote:
Posted By AugustinD on 05/22/2022 2:30 PM
The law firm ("Becker") that wrote the piece that CathyA3 cites above is the same law firm that, as of a week or so ago, will be paying $31 million to the Surfside survivors.


Sorry to digress, but this used to be our HOA law firm. They spent two years re-writing our documents and writing a position paper on every significant change. The result was unusable and we had to start over with a different attorney. Our bill from the old law firm was over $50,000 for one year. They brought the attorney and two associates to a meeting over a few changes. Needless to say they knew how to make money.

They love to publish articles. The attorney assigned to our account published a column in the local newspaper. I'm a pretty good reader - but the column every week was unreadable.

I would say from personal experience that you need to be wary of anything that law firm produces.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By LoriM15 on 05/22/2022 3:25 PM
[snippage] this used to be our HOA law firm. They spent two years re-writing our documents and writing a position paper on every significant change. The result was unusable and we had to start over with a different attorney. Our bill from the old law firm was over $50,000 for one year. They brought the attorney and two associates to a meeting over a few changes.
Amazing.

I wonder what the attorney bills were like for Champlain Towers (the collapsed Surfside condo)? Did the high attorney fees the COA was paying result in hesitancy to pay for infrastructure repairs?
SteveH35 (Washington)
Posts: 339
Posted:
Quote:
Posted By CathyA3 on 05/22/2022 1:08 PM
Fannie Mae and Freddie Mac have issued new temporary requirements to mitigate the risk for underwriting mortgage loans for buyers in community associations.

The New Fannie Mae and Freddie Mac Lender Questionnaire

Why this is an issue: the new guidelines require lenders to to get answers to questions about things like building soundness and structural integrity - things that board members and property managers will not have the expertise to answer. At the very least, they would have to hire pros to provide those answers - and depending on how in-depth the questions are, this could be a significant expense. (I assume that the questions are in-depth, otherwise the questionnaire wouldn't do what it is intended to do.)

The article points out that communities are not all the same, and it makes little sense to apply the same requirements to a 10-year-old community of ranch-style condos and to a 40-year-old high rise. I also wonder how effective "temporary" requirements will be.

Cathy,

This is REALLY dated news...? BTW, I created a free lender requirements resource page (https://www.(LINK-NOT-ALLOWED-PER-POSTING-RULES)/resources/lender-requirements) a few months ago with more information, including a valid link to the CAI resource page for anyone interested (https://www.caionline.org/Pages/fanniefreddiefaq.aspx).

It looks like CAI killed their "Lender Requirements" PDF from February, but I've attached a copy for anyone interested.

Regards,
Steve
📎 Attachments (1):

⏸ Downloads temporarily unavailable

📄15229179771.pdf(877 KB)
LetA (Nevada)
Posts: 2,679
Posted:

The article I posted hits close to home, sort of. I lived at this apartment complex from the late 80's to the early 2000's. I am quite surprised the it took so long for the roof to collapse.
When I first moved in there were several people that were long time residents that parked in the garage that had megshift tarps suspended from the ceiling to keep the water leaking from the parking
deck above off their cars. The garage was added several years after the first two buildings were built and the garage adjoins the two buildings from the garage. There were always leaks
of some sort and never any attempt to strip the asphalt surface from the parking deck on top, rubberize the surface and then lay new asphalt over the rubber sealant.
The only thing they attempted was to spray seal the asphalt in 1996, I remember that because I parked my white car on the Northwest side of the garage when they were doing the spraying,
I came out to find my white car covered with black spots from overspray of the tar.
I honestly don't feel any attention to detail was given to the parking structure. from the news report. the deck was"recently inspected" and passed, whatever that means.

Something needs to change so things like this don't happen.

https://www.news5cleveland.com/news/local-news/oh-cuyahoga/parma-firefighters-respond-to-partial-parking-deck-collapse-at-regency-apartment
CathyA3 (Ohio)
Posts: 6,299
Posted:
I'm in favor of things that promote responsible management of communities' physical assets. And forcing the issue through lending requirements may actually be more effective than laws - at least you'll have more loud squawking as a result of people being unable to obtain financing.

My concern about the newer certifications is whose name is on them. It's one thing for a board or PM to sign off on rental numbers, reserve balances, and the like since they have first hand knowledge. But what happens if these folks sign off on items based on a reserve study that missed a few things and something goes wrong? Who will be held to account: the association or the company that did the reserve study? Reserve studies are basically educated guesses that can vary in quality, while reserve balances and rental numbers are factual, more or less.

My take on this is that the new lending requirements are probably a step in the right direction, but they haven't been thought through. (And if they're such a good idea, why are they temporary? Are Fannie and Freddie waiting to see how much push back they get? Bold prediction: anything that interferes with "business" will go away or be weakened to the point that it's ineffective.)

MaxB4
Posts: 3,513
Posted:
The bigger question is why hasn't the State of Florida done anything. They are more concerned with Mickey Mouse.
SteveH35 (Washington)
Posts: 339
Posted:
Quote:
Posted By MaxB4 on 05/23/2022 8:40 AM
The bigger question is why hasn't the State of Florida done anything. They are more concerned with Mickey Mouse.

Don't forget Minnie!

Seriously though, the FL legislature is lobbied by many deep pockets including the CIC industry at large (and CAI itself), much of which isn't interested in change. Becker & Poliakoff is a fantastic example. Their $31MM Surfside settlement contribution says it all.

Regards,
Steve
MaxB4
Posts: 3,513
Posted:
I received this through my document and data delivery service.

Fannie Mae Survey

Fannie Mae is reviewing and possibly updating their recent lending guidelines related to the structural safety and soundness of condominium/cooperative projects. HomeWiseDocs was asked by Fannie Mae to survey our customers to help us provide Fannie Mae with first-hand information associated with complying with the current lending guidelines and how the process might be made easier in the future. Please note that we will not be providing any personal or company-specific information to Fannie Mae.

The results of the survey will be aggregated before publishing the data. Please complete this short survey to help Fannie Mae improve their lending guidelines.

1. Are you using a system (such as a work order system) to track preventative maintenance work?
2. Have you spent additional funds consulting legal services providers over how to respond to the new Structural and Safety guideline questions due to the fear of liability?
3. Is there enough information and education materials to assist you in following the new temporary Fannie Mae guidelines regarding the structural integrity of a project?
4. How far ahead are you having to schedule an inspection to secure an Engineer’s Report?
5. How far ahead are you having to schedule having a Reserve Report generated?
6. Have you recently sought to get an engineer’s report? If so, what is the estimated cost you were provided?
7. Please provide any additional comments/concerns:

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