Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that provide the mortgage market with stability, liquidity, and affordability. Their goal is to keep mortgage money flowing, consequently boosting the housing market. 

Fannie Mae and Freddie Mac do not offer loans directly to borrowers. Rather, they acquire loans from banks and non-bank lenders, combine them into securities backed by mortgages, and sell them to investors. They act as intermediaries between security investors and private lenders, making them a significant component of the secondary mortgage market.

The purchases made by each GSE allow investors and home buyers who acquire real estate to have a consistent and reliable supply of mortgage money. Additionally, by offering packaged mortgage-backed securities and providingprompt principal and interest payments on the underlying loans, Fannie Mae and Freddie Mac increase the pool of funds available for housing.

However, catastrophes such as the partial collapse of the Champlain Towers South in Surfside, Florida, made mortgage giants cautious about loans connected to assets with serious safety risks. In response to this tragedy, Fanny Mae and Freddie Mac published bulletins outlining new guidelines for mortgages provided on condominiums. For example, projects are not eligible if they cannot obtain an occupancy permit or if they failed to pass a regulatory examination, such as one conducted by the New Jersey Department of Community Affairs.

Fortunately, firms like Lockatong Engineering can help community associations and cooperatives meet Freddie Mac’s and Fannie Mae’s requirements. This includes conducting a property condition assessment NJ, evaluating the condominium building, and detecting any serious structural flaws. Hiring a professional structural engineer NJ helps the association carry out its due diligence. Lockatong Engineering also offers a reserve study that can help stakeholders plan for any required structural repairs or maintenance.

Read more about the stricter Fannie Mae and Freddie Mac guidelines in an infographic by Lockatong Engineering.