I want to respond to the Business News & Note in the March 10 issue. The note reported that Fannie Mae and Freddie Mac, in response to the collapse of the Surfside FL condo, will not buy mortgages without documentation that a building has completed regular maintenance and hasn’t ignored requirements of local regulatory bodies to ensure buildings are safe.
The author, Elise Neil Bengston, expresses concern about the effect on the market: higher prices for home buyers, lower prices for sellers. I guess as head of the local Chamber of Commerce, that would be her natural concern. But I see it from the other side: this is a way to protect buyers from moving into a building that hasn’t been maintained, only to find out the problems when the building collapses or a huge assessment is imposed to pay for repairs that wouldn’t have been necessary if maintenance was done faithfully. As far as I know, buyers can’t review the condo documents until they have made an offer–an offer that might be much lower if they’d known in advance the buildings hadn’t been maintained and there were insufficient reserves for said maintenance.
Ms. Bengston’s perspective suggests that she’d be okay with a seller hiding this information to sell at a higher price. If so, shame on her.