From a Washington Post article on December 28, 2021:

"Across most housing markets, the new conforming loan limit will be $647,200 in 2022, an increase of $98,950 compared to 2021's limit of $548,250. Borrowers who need to finance a larger sum for a home purchase will need to apply for a jumbo loan, which often has stricter guidelines for borrowers, larger down payment requirements and sometimes higher interest rates because of the risk associated with a bigger loan."

This increase in the loan limits are adjusted every year by the same amount as the Federal Housing Finance Agency's average home price increase in each 3^rd Quarter of the year (2021 vs 2020). The increase is a newsworthy 18.05%, and it makes sense that the conforming loan limit would increase in lock step. In 2021, if you had a buyer go under contract for $600,000 on a primary residence, to avoid the Jumbo financing cost increase, the buyer would have to put at least $51,750 ($600,000 - $548,250) down to obtain a conforming Fannie Mae / Freddie Mac loan. Now in 2022, a $600,000 loan would be conforming because of the loan limit increase.

That is the good news. The "bad" news is that Fannie Mae & Freddie Mac are doing their best to get out of the condo lending business, or at least applying very strict standards to condo lending.  Before this year, their guidelines were still pretty tough for conforming condo loans, but now they have added a Structural Integrity component to the COA Questionnaire which adds questions like:

• Is the HOA aware of any deficiencies related to the safety, soundness, structural integrity, or habitability of the project's building(s)?
• Is it anticipated the project will, in the future, have such violations (zoning ordinances, codes, etc., which are related to safety, soundness, structural integrity, or habitability)?

I don't think many COA's would want to answer these questions and open themselves up to liability. If you are interested in more details, here is a good article about this change: READ ARTICLE HERE.

I used quotations around "bad" above for a reason though. In the short run, I believe that Condominiums will have to incur some assessments to afford structural inspections of the buildings. I'm told that these inspections can cost $50,000 - $150,000. Certainly any inspector is going to note as many issues as possible (with a ton of disclaimers, I'm sure), causing further work to be performed on the condo complex to maintain structural integrity. As the article states, 70% of all condominium loans are Fannie Mae / Freddie Mac, and 60%-70% of all condominium buildings are over 30 years old. Of course it is a good idea to make the condominium structurally sound, but it will be expensive. In the long run, this could really be a good thing for condo financing. As the Fannie Mae / Freddie Mac quantity of condo loans decreases, more lenders should become attracted to the condo market which will introduce more non-conforming financing products. It will just take time to get there.

After the Great Recession, Fannie Mae and Freddie Mac started requiring the COA's to have at least 10% of their budget placed into reserves. It was a tough thing for condo complexes and spiked the ownership costs. Prior to the Great Recession, there were many COA's operating by the skin of their teeth. They were losing money, in debt, and not carrying significant reserves. A look at the Balance Sheet of a condo complex in 2007 vs. one today is a vast difference. COA's typically now all have strong reserves and are much healthier. The stronger lending guidelines forced them to get healthy. What was painful in the transition creating the reserves, is now the new normal with stronger financial statements.

Hopefully these new structural guidelines will have the same long-term effect, improving our condominiums and the consumer's confidence in the integrity of the structures.  It just won't be fun getting there.