Overview

UPDATE NOTICE FROM MICHAEL KUSHNER: Fannie Mae and Freddie Mac rewrote their condominium eligibility standards on March 18, 2026, and a further increase to reserve funding requirements takes effect January 4, 2027. I’ve revised this Fact Sheet to reflect those changes.

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. And Fannie Mae isn’t the only one that can sink your financing. Fannie Mae and Freddie Mac are the two big government-sponsored enterprises, or GSEs, that sit behind most home loans in this country, because they buy mortgages from lenders rather than lending directly, which is what frees lenders up to keep making loans. Freddie Mac runs its own condo-eligibility review, and its version of Fannie Mae’s “Unavailable” flag is a “Not Eligible” status. A project can land on one GSE’s list without being on the other’s, so a clean record with Fannie Mae doesn’t guarantee Freddie Mac sees the project the same way.

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 and Freddie Mac playbook into clear California HOA action. You’ll learn what “Unavailable” and “Not Eligible” mean, why projects get flagged, how your HOA can now check its own standing directly with Fannie Mae instead of waiting for a lender to deliver bad news, 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.

You might also be interested in watching our podcast episode on this subject, where Sam and I discussed the delisting problem in greater detail:

Key Points

Condo projects flagged “Unavailable” by Fannie Mae, or “Not Eligible” by Freddie Mac, can stop sales, block financing, and wipe out property value overnight. Both enterprises run their own review, keep their own list, and reach their own conclusions, so your HOA has to satisfy two sets of standards rather than one. The following points explain what those two designations mean, how each enterprise talks about the problem differently depending on whether it’s addressing a lender or an HOA, what causes a project to get flagged in the first place, and how California HOAs can correct the problem. They also explain how your HOA can check its own standing with both Fannie Mae and Freddie Mac, for free, before a single buyer’s loan falls apart.

• 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. You’ll never see that label yourself because only lenders have access to the CPM, and Fannie Mae doesn’t publish its eligibility decisions to the public. 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.
  • Fannie Mae has two different names for the same problem, but your HOA will only ever see one of them. “Unavailable” is the status label attached to a project inside the CPM, but only lenders get to see it. When Fannie Mae talks to HOAs rather than lenders, it uses different language, referring instead to “ineligible conditions,” meaning the specific ways a project falls short of Fannie Mae’s published requirements. Both terms describe the identical underlying problem. The distinction gives your HOA something it can use because Fannie Mae runs a free tool called Condo Status Finder that lets your HOA register, search for your project, and see in real time whether Fannie Mae has identified any condition that fails its requirements. Board members, property managers, and authorized advisors all qualify for access. The tool won’t display the word “Unavailable” because it doesn’t show the CPM status label. Instead, it reports the underlying conditions, naming the specific requirements at issue and describing each one, which is the more useful output anyway because those conditions are exactly what your HOA has to fix. Individual owners still can’t run the search themselves, so if you’re an owner, demand that your HOA board or manager run it and report the results to the membership at an open meeting.
• Freddie Mac’s Version of Fannie Mae’s “Unavailable” is its “Not Eligible” Flag. Fannie Mae isn’t the only government-sponsored enterprise that can sink your financing. Freddie Mac runs a separate review through its Condo Project Advisor (CPA) system, and a project it disqualifies receives a “Not Eligible” status, which is Freddie Mac’s equivalent of Fannie Mae’s “Unavailable” flag. The two enterprises maintain their own lists and their own reviews, so a project can be flagged by one without being flagged by the other. That’s why a clean status with Fannie Mae doesn’t guarantee Freddie Mac sees the project the same way, and why lenders are advised to check both before relying on a project’s eligibility. Freddie Mac opened a channel for HOAs as well. An authorized representative of your HOA, which includes a board member or your management company, can submit Freddie Mac’s Not Eligible Status Data Form to find out whether Condo Project Advisor has assigned a “Not Eligible” status, and that same form starts an appeal of the status. Push your HOA to check with both enterprises rather than just one, because clearing Fannie Mae does nothing for the value of your condo if Freddie Mac still blocks a buyer’s loan. [Everything in this Fact Sheet about escaping the “Unavailable” designation applies with equal force to clearing a “Not Eligible” status.]
• 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. Before you assume the worst about your own building, though, look at what the numbers actually show.
  • Fannie Mae publishes numbers on its eligibility designations. As of August 2025, only 3.6% of projects carried an ineligible status, so a flag remains the exception rather than the norm. But it’s not all good news. The two most common reasons projects get flagged are insufficient master property insurance and critical repair issues, and Fannie Mae specifically treats a failure to satisfy state or local inspection requirements as a critical repair issue. That second reason should worry California condo owners more than any other item on the list because a balcony inspection your HOA skipped or ignored can cost you access to conventional financing on your own unit.
• 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 Seven Triggers. These are the most common reasons condo projects lose eligibility. Freddie Mac evaluates projects against a closely similar set of triggers, though the precise thresholds and documentation each enterprise requires can differ in the details, so a project should be measured against both. One trigger that used to appear on this list is gone. Fannie Mae used to disqualify established projects for investor loans when investors owned more than 50% of the units, and Freddie Mac imposed a parallel 50% owner occupancy requirement. Both enterprises retired those rules earlier this year (2026), which widens the pool of buyers for your unit if you own in a rental-heavy California condominium project, and helps you at resale even if you’ve never rented your property out. Plenty of articles online from so-called experts still tell homeowners, erroneously, that the rule still applies, but now you know better. 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.
  • Delinquencies. 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.
  • Ownership concentration and presale. Fannie Mae and Freddie Mac still limit how many units a single owner or entity can control in a project, and those limits count units that the HOA itself owns and rents out. The reason is straightforward. When one investor or company holds a large block of units in your building, the financial health of the entire project depends on whether that single owner keeps paying assessments, and every other owner absorbs the damage if that owner stops. New and newly converted projects face a second requirement because they must convey, or place under contract, at least 50% of their units to buyers who will occupy them as primary residences or second homes. That one keeps a developer from unloading a brand-new building on investors and calling it a residential community. Neither limit disappeared in 2026, so a project can still fail on ownership grounds even though the old investor concentration rule is gone.
  • Budgets and Reserves. Reserves are your HOA’s savings account for the expensive things that eventually wear out, like the roof, the elevators, the plumbing, and the parking structure. Fannie Mae and Freddie Mac currently require HOAs to put at least 10% of what they collect from owners each year into that account, but that minimum rises to 15% for loan applications dated on or after January 4, 2027. In an HOA collecting $1,000,000 a year in assessments, that’s the difference between setting aside $100,000 and setting aside $150,000, and the extra money comes from somewhere, whether that’s higher dues, cuts elsewhere in the budget, or a special assessment. Before August 3, 2026, an HOA funding below the minimum could still qualify by producing a reserve study. That escape route narrowed on that date because the HOA’s budget now has to match the highest funding recommendation in the study, and lenders can no longer accept the cheapest option (i.e., baseline funding, which sets contributions just high enough to keep the account from hitting zero). Homeowners should pay close attention to this last part. Civil Code 5550 already requires your HOA to conduct a reserve study (a report projecting what each major component will cost to replace and when) at least once every three years and to adopt a funding plan. But California reserve studies routinely lay out several funding options with a baseline at the bottom, and plenty of HOA boards have been budgeting to that bottom number for years. This is a habit that HOAs are going to have to break if they don’t want to risk seriously affecting your property values. [If you want to learn a little more about reserve studies, read my series of Fact Sheets on the topic, including this one: “HOA Reserve Studies in California: Understanding the “Percent Funded” Number.”]
  • Insurance Problems. HOAs must maintain insurance coverage meeting Fannie Mae standards that changed earlier in 2026. Most of those changes, however, are good for most HOAs in California. The core requirement survived, so your HOA’s master policy still has to cover at least 100% of what rebuilding the buildings and common area components would cost. What got easier is proving it because HOAs can now document that figure several ways, including a guaranteed or extended replacement cost endorsement, an estimate from the insurer, or the project’s insurance risk appraisal. Two other requirements disappeared entirely. HOAs must still insure roofs, but no longer at full replacement cost, and the inflation guard endorsement is gone. Those two deletions give California HOAs room to shop for affordable coverage in a market where carriers keep walking away, and they’ve already pulled some projects back into eligibility, which matters more than it might sound because insufficient master insurance ranked as the single most common reason projects got flagged under the old rules. You pay for that flexibility in a different way, though. When a policy covers the roof at depreciated value instead of replacement cost, the insurer writes a smaller check after a fire or windstorm, and your HOA makes up the difference out of reserves or by hitting you with a special assessment. One requirement moved the other direction. A master policy can no longer carry a per-unit deductible above $50,000, and when the master policy has any per-unit deductible at all, every owner with a mortgage must carry an individual policy covering at least that amount. Finally, when a lender flags an insurance gap, your HOA can address it in one of two ways. It can buy the missing coverage and produce the new policy, or it can have its insurance broker reissue a corrected certificate. The latter if often enough to solve the problem because plenty of so-called gaps turn out to be nothing more than sloppy certificates that failed to list coverage the policy already provided.
• 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. Some of what you’ll find online was accurate a year ago, but isn’t anymore. So keep this Fact Sheet handy. Below are the most common myths, along with the truth. [Every one of these myths costs owners real money because each one gives an HOA board a reason to wait when waiting is the one thing that guarantees the problem gets worse.]
  • Once a project is “Unavailable,” it’s permanent. That’s false, and the same goes for Freddie Mac’s “Not Eligible” status. Projects regain eligibility with both enterprises once the HOA fixes the underlying issues and documents the fix. Fannie Mae has updated the eligibility status of more than 2,000 projects since 2022 after HOAs supplied that documentation, and Freddie Mac runs a formal appeal process that an authorized representative of your HOA can start using the same form used to check your community’s status.
  • Nobody can find out about a problem until somebody’s loan dies. Not anymore. Your HOA board or manager can check the project’s standing with Fannie Mae at no charge and in real time, and an authorized representative can do the same with Freddie Mac. If your board tells you there’s no way to know, they’re wrong.
  • 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.
• If your condo project has been flagged by Fannie Mae or Freddie Mac, call the HOA attorneys at MBK Chapman. According to industry insiders, the HOA attorneys at MBK Chapman are the most respected homeowner-side HOA lawyers in California, and they know what these designations do to your property values and how to force an HOA board to take the problem seriously. If your HOA board is ignoring an eligibility problem, refusing to check the project’s status, or failing to produce the documentation that would restore your access to conventional financing, contact us today.

Fannie Mae’s “Unavailable” designation and Freddie Mac’s “Not Eligible” status both come off once your HOA fixes what caused them and proves it with documentation. The harder problem is timing, because the standards moved twice in 2026 and they move again on January 4, 2027, which means a project that satisfies both enterprises today can fail the same test a few months from now without changing a thing about how it operates. Your HOA board no longer has any excuse for not knowing where the project stands, and neither do you, because both enterprises now hand HOAs a free way to check. Push your board to run both checks and to report what comes back at an open meeting, and if the board stalls, treat that as its own answer.

FAQs

About Michael Kushner

Michael Kushner is a California attorney with over 30 years of experience representing homeowners in disputes with their HOAs. He is widely regarded as California’s leading homeowner-side HOA attorney, and has built one of the state’s most prominent law practices dedicated to holding HOAs accountable under the Davis-Stirling Act and California law.

In addition to his law firm’s work, Michael is a recognized lecturer, author, and the host of the hit HOA HELL podcast, where he provides homeowners living in HOA-governed communities with clear, practical strategies for dealing with bad HOAs. He’s also the author of the best-selling book, HOA HELL | California Homeowners’ Definitive Guide to Beating Bad HOAs, which has become a go-to resource for both homeowners seeking real-world solutions to their HOA disputes, as well as those good HOA board members who are interested in doing a good job.

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.

AND DON’T FORGET TO TUNE INTO MY PODCAST, HOA HELL

YOU CAN ALSO ORDER MY GROUNDBREAKING BOOK

HOA HELL | California Homeowners’ Definitive Guide to Beating Bad HOAs

Amazon  |  Barnes & Noble