• Wednesday, December 7, 2022


Its a Wonderful Life: 21st Century Sequel / Freddie Mac Post Surfside Guidelines (Bulletin 2021-38)
December 19, 2021

A significant change in mortgage loan underwriting will have an IMMEDIATE impact on Florida condominium associations, not just in the transfer approval process, but on budgeting, including reserves, and on long term maintenance plans!

For those whose family have a holiday tradition of a ceremonial rerun of It’s a Wonderful Life, who would have thought that a banker would come to rescue?


Ok, that might be overstating it.


Effective lender oversight of Florida residential condominium projects has been the subject of discussion, perhaps if a roundabout method to prod owners to accept the need to undertake, and fund work. Let us hope that the methodology will not proverbially kill the messenger.

In any event, Freddie Mac, affectionately known named as the Federal Home Loan Mortgage Corporation, on Thursday issued a Bulletin 21-38 with the captivating title “Temporary Condominium and Cooperative Project Requirements and Topic 5600 Reorganization.” Freddie, as friends call it, expressly promulgated these regulations as a result of Surfside/CTS, and apply to all condominiums with five units or more even if the condominium is otherwise exempt from review.


Before describing the highlights, a few cautions. The action is not a Florida decision, but is on a national level. Of course, Freddie does not buy all mortgages, but it has an impact far beyond its immense purview.


Associations should be prepared to address questions and provide information responses IMMEDIATELY! Why? Contracts are now written for closings on and after February 28, 2022, that’s not even 75 days off. More on that magical date below. Think about it, even though there are many contracts with shorter closing times, as time marches forward, more and more, and inevitably by the end of January, a mere month away, all contracts will be after that date!


A few of he highlights may compel Florida condominium associations to effectively plan long term maintenance needs because waiting until it is needed may cut off Freddie Mac mortgage financing!

  • Units in condominiums with critical repair needs are not Freddie Mac eligible.
    • Even if administration is diligent, the work has started.
    • Even if fully funded!
  • Engineer’s reports likely will be required as proof of completion.
  • Special assessments are to be evaluated to determine if for critical repairs.
  • A questionnaire is created.
    • Five pages to be completed by the Association or management.
    • Requires interpretation of governing documents.
    • Requires disclosure of all litigation.
    • Requires evaluation of
      • unit uses
      • multi unit owners
      • insurance
  • Effective for settlement dates of February 22, 2022.
    • Closing may be a different date!
    • Though stated as “temporary” there is no end date.
    • Condominium and cooperatives, though apparently not homeowners’ associations.

Devil is always in the details, so here are the definitions which are relatively broad




Critical Repairs

Repairs and replacements that significantly impact the safety, soundness, structural integrity or habitability of the project's building(s) and/or that impact unit values, financial viability or marketability of the project. These repairs and replacements include:

  • All life safety hazards
  • Violations of any federal, State or local law, ordinance or code relating to zoning, subdivision and use, building, housing accessibility, health matters or fire safety
  • Material Deficiencies
  • Significant Deferred Maintenance

Material Deficiencies

Unresolved problems that cannot reasonably be addressed by normal operation or routine maintenance and which include:

  • Deficiencies which, if left uncorrected, have the potential to result in or contribute to critical element or system failure within one year
  • Deficiencies that will likely result in a significant escalation of remedial cost related to any material building components that are approaching, have reached or exceeded their typical expected useful life or whose remaining useful life should not be relied upon in view of actual or effective age, abuse, excessive wear and tear, poor maintenance and exposure to the elements
  • Any mold, water intrusions or potentially damaging leaks to the project's building(s)

Significant Deferred Maintenance

The postponement of normal maintenance, which cannot reasonably be resolved by normal operations or routine maintenance and which may result in any of the following:

  • Advanced physical deterioration
  • Lack of full operation or efficiency
  • Increased operating costs
  • Decline in property value

These definitions may cause pain! Let us see the fights begin over whether something is a routine repair or a critical repair, and requirements to complete the form.


There is more. Interestingly, Bulletin highlights “reminders” of the need for reserves, the basic 10% requirement and the detail for reserve studies to crawl under the 10%. Think that they are signaling and increased review or audit process to ensure requirements? Yes, that may finally push many to “fuggetaboutit” when thinking about waiving reserves.


Here are the links

To Regulation material:


To the new Condominium Questionnaire:



Start planning! Happy Holidays!!


The only thing necessary for the triumph of evil is for good men to do nothing.

- Edmund Burke

We must criticize without wounding and debate without dehumanizing our opponents. Fight for the things that you care about, but do it in a way that will lead others to join you.

- Ruth Bader Ginsburg


Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar