Financing halted for 6,102 condos

Without public warning, Fannie Mae unceremoniously pulled the plug on its condo warranty approval for 6,102 condominiums and singlefamily condos at Laguna Woods Village as of Jan. 31.

Specifically, we’re talking about Third Laguna Hills Mutual, which represents about half of all the homes in the 55-and-older community. The community, according to its HOA management company, has a nearly $1 billion insurance deficit, prompting the mortgage giant to pull it from its list of eligible (warrantable) condos. Instead, Third Laguna Hills Mutual was placed on the unwarrantable condo list.

This means no more cheap, conventional financing for buyers or refinancers.

Condominium insurance requirements forever changed for Laguna Woods and every other condo complex after the catastrophic, surfside condo collapse in South Florida on June 24, 2021. Ninety-eight Surfside occupants died.

The Surfside association was woefully short on insurance coverage. It reportedly had $50 million in insurance, but payout estimates were as much as $1 billion, according to a Wall Street Journal article.

That means most mortgage lenders will not offer purchase or refinance financing because lenders look to Fannie Mae’s condo eligibility list as a guide, including mortgage giant Freddie Mac.

It’s not the first finance shakeup for the village.

Two years ago, United Laguna Woods Mutual (with 6,323 co-ops), saw its only lender, National Cooperative Bank, pull out over Fannie Mae’s insurance requirements, according to Dan Yost, an insurance and risk analyst at Village Management Services. The company is the HOA management company for both Third Laguna Hills Mutual and United Laguna Woods Mutual.

Third Laguna Hills Mutual is not Fha-approved. So for now, finance options include Va-ap