Surfside Condominium Tragedy Results in Stricter Fannie Mae and Freddie Mac Requirements
The Champlain Towers South in Surfside, Florida, partly collapsed on June 24, 2021, leaving 98 people dead and many more homeless. Initial studies found that design flaws, substandard construction, and a lack of proper and regular building maintenance likely contributed to the disaster.
On June 26, 2021, Surfside authorities released Engineer Frank Morabito’s 2018 report from the condominium board’s first review of the skyscraper. The analysis uncovered that the property’s pool deck and underground parking garage already had significant structural damage. However, the owners postponed making the necessary serious structural repairs and completed only superficial surface repairs, concealing traces of deterioration with concrete, pavers, and tiles.
Incidents like this emphasize the dangers of aging buildings and deferred critical repairs. Fortunately, these are problems that can be prevented with regular property condition assessment NJ. Having it done by a structural engineer NJ will help in maintaining safe, weather-resistant, and structurally sound buildings. The evaluation will give the organization an evaluation of extensive and required repairs and a cost estimate.
The disaster also made mortgage industry giants apprehensive of loans secured by assets with serious safety concerns. Federal National Mortgage Association (FNMA or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac), participants in the secondary mortgage market, took measures to preserve trust in the system. They introduced new contract criteria for condominiums and cooperatives which aims to raise the bar for mortgaged homes. These provisions also seek to prevent property catastrophes and their repercussions in the financial industry.
Fannie Mae and Freddie Mac are government-sponsored enterprises that contribute significantly to the affordability and availability of mortgages. Intermediaries between private lenders and security investors constitute a portion of the secondary mortgage market.
Banks utilize federal mortgage agency funds to make further loans to borrowers. Fannie Mae and Freddie Mac use the proceeds from the sale of securities to buy new loans, perpetuating the cycle. Meanwhile, purchasers of securities profit from reduced investment risk. These mortgage giants offer banks, savings, investment, and other mortgage firms in the United States liquidity, stability, and guarantees.
To know more about the Surfside condominium tragedy resulting in stricter Fannie Mae and Freddie Mac requirements, read the infographic below from Lockatong Engineering.