A once-quiet, confidential list maintained by the federally chartered mortgage giant Fannie Mae has ballooned, placing hundreds of South Florida condominium buildings in a precarious position: unable to secure conventional mortgage financing or even loans for critical repairs.
A Swiftly Growing “Ineligible” List
Newly released figures from the law firm Allcock Marcus reveal that 696 condo buildings in Miami-Dade, Broward, and Palm Beach counties now appear on Fannie Mae’s internal ineligible list—sometimes referred to as a “blacklist” by industry watchers. That’s nearly half of the 1,438 Florida condos flagged statewide. According to Miami attorney Jake Marcus of Allcock Marcus, this marks more than a doubling in the last two years alone.
“I think it’s the perfect financial storm for condominiums in Florida,” Marcus said, pointing to the state’s stringent new safety regulations, soaring insurance costs, and longstanding financial shortfalls at many associations.
Why Being “Blacklisted” Matters
Fannie Mae and Freddie Mac back about 70% of residential loans in the United States, setting lending standards that most banks and mortgage companies adhere to. If a condo is deemed ineligible by Fannie Mae, buyers needing conventional mortgages may find it nearly impossible to purchase units there. Meanwhile, associations on the list may struggle to get financing to complete urgent repairs.
Cash buyers are exempt from the Fannie and Freddie criteria, but few residents can afford that route—particularly in older or less-affluent buildings already juggling high insurance premiums and maintenance fees.
Unseen Until the Surfside Collapse
The existence of Fannie Mae’s ineligible list remained largely under the radar for years. The Champlain Towers South collapse in Surfside, Florida, in 2021 prompted the mortgage agency to tighten scrutiny of buildings with potential structural or financial problems. Associations now face extensive questionnaires about:
- Maintenance Needs: Condos with “critical repairs,” significant water intrusion, or advanced structural deterioration.
- Financial Stability: Buildings lacking sufficient insurance or failing to reserve adequate funds for deferred maintenance.
- Occupancy/Delinquency Rates: Condos with too many delinquent owners or high rental volumes often see red flags from Fannie Mae.
According to Allcock Marcus, lack of adequate insurance is currently the most common reason Florida condos land on the list, though deferred maintenance and incomplete repairs come in a close second.
“The agency said it would no longer back mortgages in condos facing ‘critical repairs’ or material deficiencies,” said Marcus. “If buildings haven’t set aside sufficient funds for needed work, they’re ineligible.”
New State Regulations Tighten the Screws
Simultaneously, condos across Florida are grappling with 2023 and 2024 legislative reforms that impose mandatory building inspections and require associations to hold enough reserves for repairs to key systems—particularly in condos three stories or taller.
- Reserve Requirements: Many older buildings had long taken advantage of a loophole allowing owners to waive reserves. Now that the practice is largely barred, residents face steep special assessments to fill funding gaps.
- Insurance Premiums: Condo insurance rates have skyrocketed in many parts of Florida, exacerbating existing fiscal pressures.
“Owners are caught in a bind,” Marcus noted. “They can’t afford big special assessments, but they also can’t sell their units at a reasonable price if their condo is on the blacklist.”
Potential for Bulk Sales and Redevelopment
As some associations consider their financial limits, bulk buyouts by developers—often with the intention of tearing down older condos and constructing new properties—may become more appealing. Although a few such high-profile sales have occurred, Marcus said the market has not seen a full-blown surge yet, partly because a small group of owners can veto a bulk sale under Florida law.
“People are going to lobby for it as a better way out,” Marcus said. “Easing those restrictions might be more attractive than slapping owners with six-figure assessments.”
The Secret List’s Future
Fannie Mae has indicated in the past it might disclose more information publicly, but has not delivered on that pledge. Owners typically discover they’re on the list only after a buyer’s mortgage application gets rejected.
Allcock Marcus obtained the Fannie Mae list from a confidential source and uses it to assist associations in appealing or removing ineligibility designations. But they’ve chosen not to post it online out of concern for the impact on property values—and the liability that could trigger.
What’s Next for Florida Condo Owners?
With the number of ineligible buildings climbing and the clock ticking on mandatory repairs, many associations and owners face wrenching decisions about assessments, building upgrades, or potential sell-offs. For some, the mounting costs may make condo living—a once-reliable affordable option—unattainable.
“At the end of the day, it’s the individual owners who bear the cost,” Marcus said. “For many, it’s becoming unsustainable.”