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Fannie, Freddie Tighten Rules for Condos in Vacation Locales

Fannie, Freddie Tighten Rules for Condos in Vacation Locales

WASHINGTON—Getting a mortgage for a resort-area condo might become more difficult after Fannie Mae and Freddie Mac moved to tighten rules on buildings

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WASHINGTON—Getting a mortgage for a resort-area condo might become more difficult after Fannie Mae and Freddie Mac moved to tighten rules on buildings with many short-term rentals and hotel-like amenities, some Realtors and bankers say.

Fannie Mae last month changed its rules to make it clearer that it won’t back certain loans in high-rent vacation areas, with Freddie Mac taking similar steps that go into effect next month.

The moves by the two government-controlled mortgage giants come as the Trump administration seeks to shrink their footprint in housing, especially in areas such as vacation properties that may not serve the core mission of encouraging homeownership by making it more affordable.

The updated rules, which went into effect Dec. 7 for Fannie, are starting to generate pushback from Realtors and bankers who say entire buildings could be ineligible for financing even if only some units are rented out on a short-term basis.

They also fault the process Fannie uses to determine the eligibility of a building, saying it is opaque and can’t be disputed by a building’s owners or its homeowners association.

This post first appeared on wsj.com

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