Business

Surfside Condominium Tragedy Results in Stricter Fannie Mae and Freddie Mac Requirements

On June 24, 2021, at 1:30 AM EDT, Champlain Towers South in Surfside, Florida, partially collapsed, resulting in mass casualties and fatalities. According to preliminary investigations, the disaster was likely caused by a combination of issues, including poor design, shoddy construction, and a lack of periodic maintenance.

The Miami Herald, engineers, and general contractors cited structural problems and design errors as the primary causes of the catastrophe. Based on a consultation, the surviving pieces were supported by 24×24 inch columns. Foundations in critical areas were also not constructed in compliance with then-current American Concrete Institute building requirements.

The disaster has had an impact on companies that manage, insure, finance, and regulate condominiums. It reminded industries and stakeholders to be mindful of the risks posed by deteriorating infrastructure and real estate. Consequently, it also emphasizes the need to hire a reliable structural engineer NJ for a commercial building inspection. This is to maintain the quality of the building structure and prevent accidents. 

Because of the disaster, mortgage giants became reluctant to lend money to assets with questionable safety. This disinclination also affected small lending companies. They also have to become more cautious and assertive in approving loans. 

The Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, generally known as Fannie Mae & Freddie Mac, are part of the secondary mortgage market. They recently formed new criteria for mortgages relating to apartments, cooperatives, and other real estate. In addition, these rules will raise the bar for mortgage properties, preventing catastrophes resulting in the financial sector’s collapse. Following the disaster involving the Surfside condos, Fannie Mae and Freddie Mac published advisories addressing deteriorating properties. 

Bulletin 2021-38 covers residential mortgages for condominium or cooperative projects with five or more attached units. It provides review requirements for projects that need to be fixed right away or that have unique assessments. Freddie Mac will not accept condo and cooperative mortgages requiring significant repairs. Thus, it is vital to conduct regular commercial building inspection NJ to immediately address the damaged and weak building materials and structures. Fannie Mae’s Lender Letter LL-2021-14 also states that it will no longer buy loans secured by condo or co-op projects that have significant deferred maintenance or have been given a directive to make repairs due to unsafe conditions.

To know more information, here is an infographic from Lockatong Engineering. Firms can trust Lockatong Engineering to comply with various requirements, including the Fannie Mae and Freddie Mac requirements. 

consultation of the Miami Herald

 

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