If you own a condo or are considering buying one, it’s important to know that more and more condo associations are being blacklisted by Fannie Mae (FNMA). California is 2nd only to Florida in having the highest number of blacklisted condos. Once FNMA has blacklisted a condo association, it can make it harder to buy, sell, or refinance any of the units as conforming loans (those that meet FNMA’s standards) will not be available to those properties. Conforming loans (which are also known as conventional mortgages) can bring the advantages of carrying better rates and having lower down payments.
Whether or not a true “blacklist” itself actually exists is a bit of a mystery as it is not publicly available. What is known is that a growing number of properties do not meet Fannie Mae’s (or her brother, Freddie Mac’s) criteria and become “blacklisted” as a result. When evaluating a condominium complex, FNMA will consider if there is adequate property insurance coverage, the level of deferred maintenance, the number of units being rented, along with sufficient reserve funding based on current reserve studies. When a property fails to meet FNMA’s requirements, mortgage providers are often less likely to provide financing within the complex as the loans won’t be guaranteed by FNMA.
Nationwide, over 5000 condominium complexes are known to be blacklisted. Increases in properties deemed to be blacklisted spiked after the Surfside condo collapse in Florida back in 2021. Other incidents have followed that have kept the scrutiny up and the list of affected properties on the rise. In March 2025, the law firm Allcock & Marcus released a nationwide study that reported that the number in CA increased from under 200 in 2023 to over 700! In CA, Los Angeles has the highest concentration followed by the San Francisco Bay and San Diego areas.
The ongoing insurance crisis has also fueled the rise of non-compliant condo associations. Many have seen significant premium increases in recent years. Whereas insurance companies may opt to cover the depreciated cost of something like a roof, to be compliant with FNMA’s terms, the entire roof replacement cost must be covered. Likewise, FNMA has set deductibles lower than what the insurers may offer (or the association may be willing to pay for). To try to keep things affordable, some condo associations have opted for scaled down coverage, but a “cost” of that savings can be the condos no longer being eligible for loans backed by FNMA. For owners with an existing mortgage, the change to a non-compliant policy should not affect their loan but could make it harder to refinance or sell. There has been a push by insurers to get both Fannie and Freddie to lower their insurance requirements, but time will tell on that.
For now, if you own a condo and are considering refinancing or selling, or if you’re looking to buy a condo, work with your lender to see if the unit may be blacklisted.
