Overview

If your condo loan just collapsed because the condo project that you’re looking to buy into is flagged as “Unavailable” in Fannie Mae’s system, you already know what that means: no conventional loan, no conforming financing, and a deal that’s suddenly dead. Property values drop, fingers point, and confusion spreads.

Between May 2023 and March 2025, there has been a 329% increase in condo associations designated “Unavailable” by Fannie Mae—a spike that’s beginning to hit California particularly hard. This Fact Sheet translates the Fannie Mae playbook into clear California HOA action. You’ll learn what “Unavailable” really means, why projects get flagged, and what steps condo boards and homeowners can take to get their buildings back to eligible status.

The issue is real, it’s growing, and it’s already affecting how California condos are sold, financed, and valued, and what HOAs must do to fix the problem so that their members’ biggest investments (i.e., their homes) become marketable again.

Key Points

Condo projects flagged “Unavailable” in Fannie Mae’s system can stop sales, block financing, and wipe out property value overnight. The following points explain what “Unavailable” means, what causes it, and how California HOAs can correct the problem.

• What “Unavailable” Means. If a condominium project is listed as “Unavailable” in Fannie Mae’s Condo Project Manager (CPM) system, lenders generally will not issue a conforming loan for any unit in that project. This is not public information—only lenders access CPM—but it affects every owner, seller, and buyer. So that means that it affects YOU. When your loan is denied “because of the building,” this is the reason.
• Why Condominium Projects Get Flagged in the CPM. The two big triggers are safety and money. Fannie Mae flags projects that show critical repair issues, litigation tied to safety or habitability, high delinquencies (I discuss the specific threshold below), inadequate reserves, large special assessments, or insurance shortfalls. California’s current HOA environment (e.g., Balcony Law inspections/repairs, record special assessments, and soaring insurance costs) has made these triggers more common.
• Who Is Affected by the “Unavailable” Flag? Every California condominium owner can be impacted. Fannie Mae evaluates condominium projects, not the individual buyers or borrowers. Even a strong buyer with excellent credit and a large down payment could find themselves blocked from obtaining a conforming loan if the building itself is ineligible. The only buyers unaffected by such a designation are cash buyers, i.e., people who are paying cash for a condo, and that happens relatively infrequently.
• The Big Six Triggers. These are the most common reasons condo projects lose eligibility. The good news is that every one of them can be resolved with documentation and follow-through. The bad news is that your HOA has to do the work. When your HOA understands what lenders look for and prepares the right evidence, “Unavailable” status becomes temporary, not terminal.
  • Critical Repairs and Significant Deferred Maintenance. Projects with unaddressed safety or structural issues are ineligible until repairs are completed and verified by an engineer.
  • Litigation Related to Critical Repairs. Lawsuits or pre-litigation over safety, habitability, or structural soundness are treated as ineligibility issues until resolved or shown to be “minor.”
  • Special Assessments for Repairs. If a special assessment funds a safety or structural repair that is not yet remediated, the project remains ineligible. Completion proof and documentation are required.
  • Delinquincies. If more than 15% of the HOA’s units are 60 days or more delinquent on regular or special assessments, the project fails Fannie’s test. Reducing delinquencies below that threshold and proving it with dated reports will restore eligibility.
  • Budgets and Reserves. Fannie expects HOAs to budget at least 10% of assessment income toward reserves, or to meet an equivalent reserve-study alternative. Inadequate reserve funding makes a project ineligible until corrected.
  • Insurance Problems. HOAs must maintain coverage meeting Fannie Mae standards (i.e., 100% replacement-cost property insurance, required perils, deductibles under 5%, and at least $1 million in liability coverage). Gaps require proof of supplemental coverage or updated broker certification.
• Common Myths and Reality Checks. There’s a lot of misinformation about what “Unavailable” means and how long it lasts. The truth is that most projects can recover eligibility once the right steps are taken and properly documented. Below are the most common myths, along with the truth.
  • Once a project is “Unavailable,” it’s permanent. That is false. Projects can regain eligibility once the underlying issues are fixed and documented to Fannie.
  • The HOA can hide the problems. That’s not only unethical and illegal (it amounts to fraud, actually), but lenders are required to review project documentation. Concealment only delays sales and invites larger problems.
  • One small lawsuit can doom the HOA. Not necessarily. “Minor” litigation (i.e., cases that do not involve safety or habitability issues) do not disqualify a project.
  • Cash buyers make this issue moot. False. Cash buyers can close, but it doesn’t preserve property values. More importantly, since most buyers use financing, “Unavailable” status depresses comparable values for everyone.

Fannie Mae’s “Unavailable” designation isn’t permanent. HOAs can document their way back to eligibility by fixing the six main triggers. The faster HOA boards act, the faster owners regain access to conventional financing, and thus the faster their condos’ market values will return to normal.

FAQs

About MBK Chapman Fact Sheets

Homeowners searching for answers online will often come across articles that appear authoritative, but are actually written as search-engine marketing content rather than by an experienced HOA lawyer. These pieces tend to prioritize keyword density over clarity, accuracy, or legal context, which often leaves homeowners more confused than informed.

At MBK Chapman, our Fact Sheets are part of our HOA Law Library and are written by Michael Kushner, an HOA lawyer with decades of hands-on experience representing California homeowners. In fact, Michael Kushner is the HOA lawyer who pioneered the systems and strategies used by some of California’s most successful homeowner-side HOA law firms.

Each Fact Sheet is deliberately concise, statute-based, and designed as a quick-reference guide to help homeowners understand key HOA laws and enforcement rules at a glance.

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