By Gregory Gamalski, Bodman, PLC and Alexandra Dieck, Bodman, PLC
Most residential condominium loans are sold on the secondary market. Loan purchasers set underwriting guidelines for such loans. Loans on condominium units meeting the guidelines are commonly called “warrantable,” i.e. the lender can warrant that the guidelines are met. The guidelines most often affect new construction projects since phasing and presales affect the warranty. Until late 2021, long established projects were generally warrantable. But after the Surfside, Florida condominium collapse which killed 98 individuals on June 24, 2021, FNMA and other secondary market players have required that the condition of the project be included in underwriting for existing condominium projects. Site condominiums are not affected since for underwriting purposes those are considered single family subdivision equivalents.
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