Condo crisis: HOA's level of insurance can block owners from refinancing. This man's did.
Anticipating a refinancing offer that could save him $647 a month, Dave Mayers of Jupiter instead got a jolt of reality: The deal was nixed after lenders saw the level of insurance his condominium association was carrying.
Inadequate insurance is the most oft-cited reason that more condominium associations are on federal mortgage guarantor Fannie Mae's blacklist, a number that's more than tripled over the past two years. This kind of listing makes it more difficult for condo buyers to get loans, for condo associations to borrow for repairs and, for residents like Mayers, to refinance an existing mortgage.
'I've never been rejected for a loan in my life,' said the 74-year-old retired Pennsylvania furniture store owner.
The Legislature this session passed a bill that made new rules for condo associations to take out loans and get lines of credit to finance needed repairs — seen as helping condo dwellers cope with new state regulations designed to avert a deadly disaster like the one that felled a 40-year-old Miami-area condo tower.
The new legislation clarifies three options for acceptable levels of condo insurance.
Still, following the guidelines set out in the bill awaiting Gov. Ron DeSantis's signature might not get associations a clean bill of health from financial institutions, which are looking for condos to be insured at full replacement value.
Talking about the legislation's insurance tweak, the bill's sponsor, Sen. Jennifer Bradley, R-Fleming Island, said: 'There are associations in Florida that I think are being asked to carry coverage levels at an exorbitant cost and insurance levels they will never touch. So … in consultation with their insurance specialist, they (condo associations) will be able to land on the proper level that is adequate from a protection standpoint.'
The bill allows for condos' common property to be insured at 'insurable value.' Fannie Mae, however, requires what may be a higher bar: that the common property is insured for the full replacement cost — a guidance that many banks follow in deciding who gets a loan.
Andy Kasten, president of Fort Lauderdale-based Creative Financial Property and Casualty, said insuring for anything less than full replacement value could mean of a repeat of the Surfside debacle, where the association was unable to rebuild because of underinsurance. In that tragedy, 98 people were killed when the Champlain Towers South condominium in Surfside collapsed in the early hours of June 21, 2021.
"If in fact they are allowing condos to insure at less than full replacement, where is the additional money going to come from to rebuild the structure in the event of a catastrophe?" Kasten asked. "It runs counter to what these laws that changed after the Surfside collapse were supposed to do. You can never assume that you are not going to have a 100% loss."
Rep. Vicki Lopez, R-Miami, who sponsored the legislation about to become law, acknowledges that the clarified options in her bill don't line up with Fannie Mae's. She argues that it's financial institutions that need to adjust their requirements. What they consider acceptable levels of insurance when it comes to backing mortgages are holding condos hostage, she said.
"If you are ensuring to the full replacement value, it could be said that you are over-insured, because never in a disaster has one of our condo buildings been leveled," Lopez said. "They may have roof issues, air conditioning issues, window issues, but the whole building doesn't go down.
"... My next step is to try to connect with either U.S. Sen. (Ashley) Moody or Sen. (Rick) Scott or one of our congressional delegation members to say, look, we have to have a meeting with [federal home loan company] Freddie Mac and Fannie Mae so they are aware of the financial impact they are having on condo owners in terms of insurance when they insist on having full replacement value," she said.
His condo's status has Mayers — and many more who may not know it — in a catch-22 he's been emailing lawmakers and state agencies about to no avail, he said. The condo can't get the required insurance because the roof is too old, but it's not old enough that it needs replacing, he said.
'They've been getting prices on replacing the roof, but they don't want to do it yet — it's not an emergency,' Mayers said. 'We have to fund other things the state is mandating.'
As the state's scrutiny of the condition of condominium buildings increased following the Surfside disaster, the insurance market for condominiums worsened.
Only two or three companies would insure garden-style, low-rise condos and coverage for high-rises were simply unaffordable compared to years past, according to Tyler Spaedt, vice president at Valley Insurance Services, which specializes in condo communities.
'The last three years were the toughest markets that there's ever been in Florida,' Spaedt said.
In the last five to eight months, though, things have started looking better.
'People are starting to save and more (kinds of) coverages are becoming available,' Spaedt said.
Still, he says, about one of the 10 of associations he's covering can't manage to buy the insurance that would pay for the full replacement value of a condo association's common property.
'It's not always about what they're going to save, even though that's a big part of it. … Some of it (the associations getting insured for less than the replacement value) is that it's not available to them, based on the condition of the building,' Spaedt said.
There are 1,438 'blacklisted' Florida condos deemed ineligible for Fannie Mae-backed loans, and potentially other banks. The blacklisting, mostly confidential, is the result of answers given to lender questionnaires that involve everything from deferred maintenance to delinquent special assessments.
One condo can be on the list for multiple problems, but insurance problems are cited the most often among these condos, according to attorney Jake Marcus, whose practice, Allcock Marcus, has offices in Miami and Massachusetts.
Florida's condo crisis: Is it bad enough to call a special legislative session?
There's some comfort, though.
'What's happening in Florida is eventually going to make its way to other jurisdictions,' Marcus predicted.
Michael J. Gelfand, a West Palm Beach attorney who specializes in condo association law, said he urges associations to get the full replacement value if they can.
'Insuring a roof for its actual cash value doesn't work,' Gelfand said. 'When it's depreciated, it's pennies on the dollar for the cost of replacement.'
Florida's condo crisis: In 3 Palm Beach County communities, big issues = high assessments
Mayers said he was hoping the expected drop in his interest rate was going to help him pay for the new assessments triggered when his condo underwent its state-required structural integrity reserve study, trying to comply with the first set of state regulations that were passed, post-Surfside, in 2022.
'I was really counting on the savings I was going to receive from a refinance to help with all the added expenses of the increased reserves,' Mayers said. 'If condos in Florida can't acquire mortgages or refinancing because of Fannie (Mae's) … new mandates and pile that on top of the (structural integrity reserve study) mandates, what happens to seniors, like myself, and to the property values in Florida? This is just crazy.'
Palm Beach Post reporter Kimberly Miller contributed to this report.
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com.Help support our journalism. Subscribe today
This article originally appeared on Palm Beach Post: New condo scrutiny gets associations blacklisted for insurance status
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Washington Post
16 minutes ago
- Washington Post
Trump calls for special prosecutor to investigate 2020 election, reviving longstanding grievance
WASHINGTON — President Donald Trump on Friday called for the appointment of a special prosecutor to investigate the 2020 election won by Democrat Joe Biden, repeating his baseless claim that the contest was marred by widespread fraud. 'Biden was grossly incompetent, and the 2020 election was a total FRAUD!' Trump said in a social media post in which he also sought to favorably contrast his immigration enforcement approach with that of the former president. 'The evidence is MASSIVE and OVERWHELMING. A Special Prosecutor must be appointed. This cannot be allowed to happen again in the United States of America! Let the work begin!'
Fast Company
19 minutes ago
- Fast Company
Kirkland's Home is closing dozens of stores in new rebrand, adding to list of retailers shutting locations in 2025
Dozens of Kirkland's Home stores will close as part of the retailer's recently announced rebranding efforts. Some existing stores will be converted to Bed Bath & Beyond Home stores as part of the transformation, the company said this week. Kirkland's will streamline its footprint by closing at least two dozen of its 313 existing Kirkland's Home stores. The company will launch its first Bed Bath & Beyond Home store in Brentwood, Tennessee, in August 2025, with five stores to follow. Pending the initial market launch, the retailer intends to open approximately 75 additional stores through 2026. The Tennessee-based retailer also plans to open its first physical Overstock store location in Nashville, with about 30 additional stores to open after the initial launch. These plans align with Kirkland's broader goal to be a multi-brand retail operator. 'By consolidating real estate and leveraging underperforming store closures to reduce excess inventory, we believe we will drive faster inventory turn and maximize return on assets,' the retailer said in a press release. 'Following the consolidation, we expect to move forward with approximately 290 of our current store locations as the foundational footprint for Kirkland's Home, Bed Bath & Beyond Home, and Overstock.' Fast Company contacted the brand to request a list of locations that will close. We will update this story if we receive a reply. Kirkland's Home rebrand reflects a broader transformation Kirkland's corporate name will officially change to The Brand House Collective pending shareholder approval at the company's next annual meeting on July 24, 2025. Its ticker symbol will also change from 'KIRK' to 'TBHC,' pending approval next month. Kirkland's CEO, Amy Sullivan, explained the intention behind the rebrand in the company news release: 'We're aligning our identity with our vision to become a multi-brand merchandising, supply chain and retail operator—and backing it with decisive actions to strengthen our foundation: reducing excess inventory, closing underperforming locations, optimizing real estate assets, and enhancing talent across the organization.' Amy Sullivan will lead as the CEO and chief merchant and creative officer of The Brand House Collective. The company announced the following additions to its corporate team: Chief Operating Officer Jamie Schisler will oversee operations. VP General Merchandising Manager of Bed Bath & Beyond Home Kerri Dlugokinski will lead all merchandising efforts. VP of Supply Chain Courtenay Adolf is responsible for global sourcing, transportation, and distribution centers. The retailer also announced changes to its board of directors. Effective June 24, 2025, appointees Eric Schwartzman, Neely Tamminga, Tamara Ward, and Steve Woodward will serve as board members. In October 2024, Kirkland's announced a strategic partnership with Beyond, Inc., which owns brands Bed Bath & Beyond, Overstock, and buybuy Baby.
Yahoo
19 minutes ago
- Yahoo
How Is Carnival Corporation's Stock Performance Compared to Other Travel Services Stocks?
With a market cap of $27.5 billion, Carnival Corporation & plc (CCL) is the world's largest cruise company, providing leisure travel experiences across North America, Australia, Europe, and other international markets. Operating under well-known brands such as Carnival Cruise Line, Princess Cruises, Holland America Line, and Cunard, the company carries nearly half of global cruise guests. Companies valued at $10 billion or more are generally classified as 'large-cap' stocks, and Carnival Corporation fits this criterion perfectly, exceeding the mark. It also operates port destinations, hotels, railcars, and motorcoaches to support its cruise and tour offerings. Dear Tesla Stock Fans, Mark Your Calendars for June 30 3 ETFs with Dividend Yields of 12% or Higher for Your Income Portfolio Nvidia Is Quickly Approaching a New Record High. Is It Too Late to Buy NVDA Stock? Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! Shares of the Miami, Florida-based company have decreased 16.9% from its 52-week high of $28.72. Shares of Carnival Corporation have increased 12.5% over the past three months, outpacing the Direxion Daily Travel & Vacation Bull 2X Shares' (OOTO) 1.9% rise over the same time frame. Longer term, CCL stock is down 4.3% on a YTD basis, a less pronounced decline than OOTO's 19.3% drop. Moreover, shares of the cruise operator have surged 48.5% over the past 52 weeks, compared to OOTO's 8.9% return over the same time frame. The stock has risen above its 50-day moving average since early May. Despite reporting better-than-expected Q1 2025 adjusted EPS of $0.13 and revenue of $5.8 billion, shares of CCL fell 1.2% on Mar. 21. While operating income nearly doubled year-over-year to $543 million and adjusted EBITDA rose 38.3% to $1.2 billion, the company still holds $27 billion in debt, only slightly down from $27.5 billion the prior quarter. In comparison, rival Booking Holdings Inc. (BKNG) has lagged behind CCL stock over the past 52 weeks, increasing over 34% over the past 52 weeks. However, BKNG stock has gained 7.2% on a YTD basis, outpacing CCL's performance. Due to the stock's outperformance over the past year, analysts are bullish about its prospects. The stock has a consensus rating of 'Strong Buy' from the 25 analysts covering the stock, and as of writing, CCL is trading below the mean price target of $28.42. On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
