Learning from Fannie Mae’s ‘Unavailable’ List

Fannie Mae is an important part of the U.S. housing industry since it purchases mortgages from banks, injecting liquidity and stability into the market. However, in response to structural integrity and financial health concerns, Fannie Mae also has an “Unavailable” list. The private list holds condominium associations that fail to meet the standards of Fannie Mae, and as a result, are not eligible for conventional financing.

Condominiums occupy a spot in this list due to issues such as postponed upkeep, absence of appropriate insurance protection, and finances. As of March 2025, there are over 700 condominium associations in California included on the list, a massive increase from nearly 170 reported in May 2023. This is tremendously impacting the California condo market both for buyers and sellers.

At LBC Mortgage, we understand how challenging it is to get condo financing amidst Fannie Mae’s restrictions. Our experts are skilled at helping buyers and sellers overcome these challenges by arranging substitute financing alternatives and guiding clients through the complex mortgage landscape.

The Impact on Condo Sales in California

Fannie Mae “Unavailable” condominiums are severely handicapped in the marketplace. Prospective buyers generally rely on conventional Fannie Mae-insured loans, but such loans become unavailable to units within impacted developments.

Limited Buyer Pool and Lower Property Values

Condo sellers on the “Unavailable” list have a smaller pool of potential buyers. Financing buyers must seek other properties, leaving only cash buyers or buyers with unconventional financing as possibilities.

This restriction lowers property prices and keeps properties on the market longer.
Without conventional mortgage financing, sellers will have no choice but to lower prices to attract buyers who pay cash or secure other financing. The ripple effect lowers property values in the neighborhood and slows total market activity.

Case Study: Rossmoor Community

The Rossmoor community in Walnut Creek, California, illustrates the challenges posed by Fannie Mae’s “Unavailable” list. Due to increased wildfire risks and resulting insurance issues, Fannie Mae and Freddie Mac have stopped backing mortgages in Rossmoor without full insurance coverage. This situation has forced many homeowners to rely on cash sales, which has limited buyer interest and made it difficult for older residents to access reverse mortgages.

At LBC Mortgage, we have helped clients in similar situations secure financing through non-conventional means. Our deep understanding of the California market allows us to navigate these complex issues and offer tailored solutions to our clients.

Challenges in Mortgage Accessibility

When a condo complex is placed on Fannie Mae’s “Unavailable” list, it becomes nearly impossible for buyers to secure conventional financing. Most traditional lenders follow Fannie Mae guidelines, so they will not approve loans for condos in these flagged developments.

Higher Costs for Alternative Financing

Buyers are forced to explore alternative financing options, such as non-QM (non-qualified mortgage) loans, portfolio loans, or private lending. These options often come with higher interest rates, larger down payment requirements, and less favorable terms.

At LBC Mortgage, we specialize in securing non-conventional financing for condos on the “Unavailable” list. We work closely with clients to find the best possible terms and ensure that financing remains accessible despite Fannie Mae restrictions.

The Role of Insurance in Mortgage Approval

Insurance plays a critical role in securing mortgage approval. In California, the increasing frequency of wildfires has led to higher insurance premiums and, in some cases, the inability to secure sufficient coverage.

If a condo association’s insurance policy does not meet Fannie Mae’s standards, mortgage applications will likely be denied. LBC Mortgage works with clients and condo associations to identify insurance gaps and explore solutions that can restore financing eligibility.

LBC Mortgage: Your Trusted Partner in Navigating Complexities

At LBC Mortgage, we understand the California condo market better than anyone. We know how to navigate the challenges posed by Fannie Mae’s “Unavailable” list and try to find solutions that work for our clients.

Customized Financing Solutions

Every condo and financial situation is unique. LBC Mortgage evaluates each client’s circumstances to develop personalized financing strategies. Whether it’s through non-QM loans, private lending, or portfolio loans, we work hard to find options that align with our clients’ goals.

We have established strong relationships with alternative lenders, giving our clients access to financing options that may not be available through traditional channels. This advantage allows us to offer more competitive rates and terms, even for properties on Fannie Mae’s restricted list.

Advocacy and Support

At LBC Mortgage, we don’t just secure financing—we advocate for our clients. We work directly with condominium associations to address issues that lead to “Unavailable” status. By encouraging better financial management, proper insurance coverage, and proactive maintenance, we help condo communities regain eligibility for conventional financing.

Our team also provides clients with the latest market insights and financing updates. We empower clients to make informed decisions and avoid potential roadblocks in the mortgage process.

The Importance of Due Diligence for Buyers

Prospective buyers should conduct thorough due diligence when considering a condo purchase. Understanding the condo association’s financial health and structural integrity is crucial for securing financing.

Reviewing Financial and Association Documents

Purchasers must examine the budget of the condo association, meeting minutes, and reserve studies. Warning signs such as impending lawsuits, dwindling reserve accounts, and inadequate maintenance reports might be precursors to potential finance issues in the future.

LBC Mortgage provides expert support for buyers to aid them in recognizing the financial and structural state of the property before they invest in it. Our professional team is dedicated to keeping buyers from costly surprises and gaining the most suitable financing conditions.

Verifying Insurance Coverage

Buyers should verify the condo association’s insurance policies are Fannie Mae compliant. Insufficient coverage or policies with major exclusions can prevent mortgage approval.

At LBC Mortgage, we review insurance policies and work with clients to address any gaps that could affect financing.

Our due diligence gives buyers confidence and clarity entering the process.