The tragic collapse of the Champlain Towers South condominium in Surfside, Florida, in June 2021 did more than highlight structural risks—it exposed a major financial vulnerability shared by many homeowners’ associations (HOAs): inadequate insurance coverage. The Surfside HOA had deferred critical maintenance due to funding shortages and was underinsured. That reality sent ripples across the mortgage and real estate industries, especially among lenders and buyers of condominiums.

In response, Fannie Mae and Freddie Mac revised their lending guidelines. Starting in 2022, they began requiring lenders to confirm that condo associations maintain adequate master insurance coverage and are not underfunded for reserves and deferred maintenance. If a condo project fails to meet these criteria, it is considered ineligible for conventional financing. In short, if the HOA is underinsured or financially unstable, buyers can’t use Fannie Mae-backed loans to purchase units in that community.

For homebuyers in Oregon this has real consequences. A buyer may find a condo they love, but discover mid-escrow that it’s “non-warrantable,” meaning it doesn’t meet Fannie Mae’s updated guidelines. That disqualifies them from traditional loans, potentially derailing the purchase.

We are seeing this happen. Condo buildings are being flagged because their HOAs haven’t completed structural inspections for years and are holding reserves far below recommended levels. Lenders are refusing to finance units until documentation is provided.

So, what are a buyer’s options?

• Non-warrantable condo loans: Portfolio lenders, such as local credit unions, may still finance the purchase, though typically at higher interest rates.
• FHA loans: These require the condo to be on the FHA approved list, which is limited.
• Cash purchases: A viable path for those who can.

Ultimately, the Surfside collapse prompted a necessary tightening of standards, but it also made due diligence even more critical for Oregon condo buyers. Reviewing HOA financials and insurance coverage isn’t optional anymore—it’s essential. Buyers should work closely with experienced Realtors and lenders who understand these new guidelines and can help them navigate the complexities of condominium financing in the post-Surfside landscape.

Let us be your real estate experts to guide you through whatever homebuying or selling decision you are considering. We have the experience, expertise, connections and hyperlocal market insight to make your next move your best one.

Kevin Costello kevin.costello@cascadehasson.com 503.939.9801

Riley Costello riley.costello@cascadehasson.com 971.322.6205