A lot of condo - townhome properties are now uninsurable or non-warrantable

UNINSURABLE CONDOS / TOWNHOMES

When a condo or townhome project is deemed uninsurable or ineligible by Fannie Mae or Freddie Mac, it becomes non-warrantable, which can instantly wipe out the majority of your potential buyer pool. John Catalano and the Heroes Real Estate Program are still closing these properties for our sellers. It's not impossible, but it is difficult and this is where experience matters. John Catalano and the Heroes Real Estate Team are ' Armed With Real Experience".

Risk Factors When Buying or Selling A Non- Warrantable Condo or Townhome

Impact on the Buyer Pool

Massive Reduction in Buyers: Since Fannie Mae and Freddie Mac support approximately 70% of the mortgage market, losing their backing excludes most buyers who rely on conventional financing.

Financing Restrictions: Buyers are restricted to cash purchases or specialized non-warrantable condo financing, such as portfolio loans.

Higher Costs for Buyers: Alternative financing typically requires larger down payments (often 20% or more) and carries higher interest rates.

Stagnant Sales: Units often sit on the market longer, which frequently leads to decreased property values as sellers struggle to find qualified buyers.

Reasons for Ineligibility

Projects are typically placed on the "Unavailable" list (sometimes called a "blacklist") for several specific reasons:

Insurance Deficiencies: Master policies that do not meet minimum coverage standards, such as 100% replacement cost value.

Underfunded Reserves: Associations failing to allocate at least 15% of their annual budget to replacement reserves (a requirement increasing from 10% effective January 2027).

Safety and Maintenance: Significant deferred maintenance or unaddressed structural safety concerns.

Legal Risks: Pending litigation that could pose a financial threat to the association.

2026 Policy Updates

Recent changes from the Federal Housing Finance Agency (FHFA) on March 18, 2026, have slightly eased some of these pressures to help stabilize the market:

Roof Coverage: The rigid requirement for 100% replacement cost coverage on roofs was rolled back to lower premiums for associations.

Deductible Limits: A new flat maximum deductible of $50,000 per unit will be enforced starting July 1, 2026.

Investor Caps: The 50% investor concentration limit for established projects has been eliminated, potentially opening the pool to more professional investors.

A lot of condo - townhome properties are now uninsurable or non-warrantable. We will see what impact these recent changes will have on our real estate market when it comes to uninsurable or non- warrantable properties across the Los Angeles, San Fernando Valley and the Santa Clarita Valley.

If you are considering selling now or in the future, you need to know if your property is considered uninsured or non- warrantable. This could help you make a decision if this is the best time to sell. For buyers looking at a condo - townhome purchase, let the Heroes team provide you with pros and cons of this type of . purchase in todays market. .

Contact John Catalano with any questions or concerns in todays real estate market. The Heroes Program is owned and operated by John Catalano and was established in 2007. As a real estate profession, investor ,consultant and retired veteran police officer, our real estate program offers experience and insight that many other agents can not. Experience matters - We are " Armed With Real Experience".