On July 17, CAI’s Government and Public Affairs team met with leadership within the Federal Housing Finance Agency to share urgent concerns and specific policy recommendations to modernize condominium lending eligibility requirements administered by Fannie Mae and Freddie Mac. This meeting was in follow-up to a letter CAI sent in June to FHFA Director William Pulte formalizing the community association industry’s concerns on this pressing issue.
In my new role as chief executive officer of CAI, one of my key priorities is to continue to elevate CAI’s presence within the housing policy arena at the local, state, and federal levels. CAI’s volunteers, staff, and lobbyists have advanced community association housing policy and established an incredible foundation for us to expand and elevate efforts for members and the industry.
The condominium housing market across the country is approaching a crisis point, and swift intervention from FHFA is essential to prevent further economic harm. CAI commends Fannie Mae and Freddie Mac’s commitment to safety. However, current lending requirements disproportionately impact responsible condominium associations that are diligently working to meet evolving standards for reserves, building maintenance, and insurance. FHFA leadership is critical to CAI’s advocacy efforts to educate and persuade Fannie Mae and Freddie Mac to make necessary changes to the condominium lending process.
CAI estimates 5,400 condominium associations across the U.S. are currently on the Fannie Mae and Freddie Mac ineligible list, with an additional 100 to 300 associations added each month. Assuming a conservative average of 150 units per association, this means more than 1 million condominium homeowners nationwide are currently unable to sell their homes due to government-sponsored enterprises restrictions. These numbers are growing rapidly.
While these associations work to fund reserves, conduct inspections, and maintain their buildings, they are being penalized through inaccessible mortgage financing, collapsing property values, and shrinking homebuyer pools. Unintended consequences of rigid GSE guidelines are devastating the market, punishing responsible associations, and eroding equity for millions of homeowners.
Across the country, condominium communities embrace transparency, fiscal responsibility, and long-term planning. But they need time, tools, and access to lending to make changes effectively.
CAI is urging FHFA to immediately direct Fannie Mae and Freddie Mac to:
- Modernize and clarify insurance and reserve requirements to reflect current market realities.
- Eliminate impractical requirements such as mandatory full replacement cost coverage and non-standard deductible limits.
- Provide secure, direct access to eligibility status and remediation guidance to condominium boards and their authorized managers.
- Implement a realistic, data-driven glide path for reserve study completion and funding compliance across associations of all sizes.
The status quo is not sustainable. Homeownership is being pushed out of reach, equity is being destroyed, and communities across America are facing financial destabilization. These outcomes are avoidable, but FHFA leadership is needed to make the necessary changes to restrictive GSE condominium lending requirements.
CAI is ready to partner with FHFA and government-sponsored enterprises to develop practical, responsible, and effective policy solutions supporting safety and market stability. For more information on how to help your association understand and address lending eligibility issues that may impact property values and home sales, download CAI’s guide Condominium Lending: Fannie Mae/Freddie Mac Your Condominium Association/Housing Coop Eligibility Status.
At what point will CAI address one of the underlying issues created by boards of directors and association members that has caused part of the crisis to develop? Specifically, the lack of trained board leaders, the willful failure to pass balanced budgets, raise assessments as needed, the underfunding of reserves, borrowing and never paying back borrowed reserve funds, and most tragically as seen in Florida, deferring maintenance and failing to address safety related maintenance in condominiums?
The massive losses sustained in the insurance industry and reinsurance industry also plays a role in the crisis. When communities — especially condo communities lose their state admitted carrier insurance and have to purchase in the excess and surplus markets, the 200 to 700 percent cost increase impacts sales and loans just as much as the GSEs being unwilling to buy loans on questionable properties. We do not need another 2008 real estate debacle.
As an organization, I believe we must address the root causes — not attempt to ignore them and pretend that the loan industry and government (GSE) loan underwriters are the cause of the problem.
This is a good start. But, there is more work to be done that we do not appear to be willing to address.
I absolutely am in agreement with the comments made by R. Williamson- July 22,2025.
The underlying issue is that Board members are elected, to supposedly make decisions based on what’s best for the Community as a whole, when these individuals are no more qualified than strangers you could pick up off the streets, without any regard for education, qualifications, or experience, much less the desire to serve anything else than their own self interests.
The realization is that these individuals are only homeowners, who don’t wish to pay higher assessments to fund Reserves, just like every other homeowner.
The concept that elected homeowners should be the ones making the decisions for their own Communities has been a proven failure in the lack of adequate funding & the continued loss of property values, and who will they blame when they need to pay $50K special assessments because they have no Reserves….the property managers of course.
We hold no power over the decisions a Board makes, when they refuse to listen to our advice and guidance, so good for Fannie Mae, and the rest for creating some way of pushing Associations to meet their obligations, even if it’s in some small way.
Florida recently passed a law in which property managers can lose their licenses if they fail to adequately plan for Reserves, and the outcome of that should be interesting to see, but how about creating legislation that Associations must be managed by licensed professionals, who can truly serve in the homeowners best interest, and do away with homeowner elected Boards?
You don’t find any other non-profit corporate entities being ran by random strangers, elected through a ‘popularity contest’ in most cases, who have no knowledge or experience, but are provided access to hundreds of thousands in annual assessment revenue, and yet have no clue how to successfully manage that money, except for the ‘Association’ industry, and that is the underlying issue.
At least with professional management, they can’t steal money, but homeowners have no business making the financial decisions when you’re dealing with the largest investments most people have, and that’s the ownership of their homes, and the underlying equity. I wouldn’t let a group of strangers make decisions about the equity in my home, unless they knew what they were doing, which most Boards don’t.
Fix the root cause, and let us begin to look at Associations for what they are….as business entities, or investment accounts, which must be managed by professionals in order to be successful, and not by random volunteers, and the rest will fall in place.
Unfortunately the CCRS of our associations say the boards are hand picked by the homeowners in the association. What is needed is a better educated homeowner board. Making it easier and less expensive for this education to take place may be part of the solution. Another part may have to be a course that can be done on line at the takers time. Many board members are not willing to give up a couple Saturdays to better perform their responsibilities. Baby steps in retraining my current board. Can be frustrating but we must keep on plugging away. Smaller communities like mine give us very limited number of people.