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Non-compliance on any part of the new regulations will result in getting on that list, Tomaselli said. “If you’re out of line with any one of those, Fannie Mae is going to put you on this ‘unavailable’ list that they created,” he noted. “That’s what’s going to make greater changes in the industry, because nobody wants to be on that list.”
The emergence of the list will also send shock waves to residents who may have been unaware their buildings were in disrepair, Tomaselli added.
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There is one saving grace to the situation that Tomaselli referenced, and it’s the relatively small percentage of projects that fall in non-compliance with the new regulations. He explained that CondoTek assesses more than 2,000 buildings per month. Of the total number of such developments, he estimated some 80% to 90% fall into the “perfect” category with regular maintenance and plenty of capital to support repairs. Another 5% to 10% have some unique issue that may make then ineligible for mortgage financing, Tomaselli said, but can easily become compliant with simple repair work. But around 10% are “devastatingly behind the eight ball,” Tomaselli acknowledged.
“Not enough capital, no money set aside,” he said. Moreover, many of those buildings are aging – some at least 40 years old. “By the way, that’s exactly what happened at Surfside,” Tomaselli said, referencing the collapsed condo that claimed nearly 100 lives. “The board knew there were structural issues for close to 20 years. What the board didn’t want to do was spend the money to complete those repairs that were necessary. If they did it 20 years ago, it might have been $2 million. Now, you have 90-something people that died as a result of them not setting aside that money. What’s the price of a life? It just boggles the mind.”
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