How Will Fannie/Freddie Resort Condo Guidelines Impact Market?

[Jennifer Wilson]

As of today, Decempber 7th, 2020, Fannie Mae and Freddie Mac put out new Resort Condo Guidelines that determines if a condo project will be considered ineligible for their standard financing options.  From the rough outline that I have been provided, it appears that a condo complex will be ineligible if any of the following apply:

- Is transient in nature, offering hotel type services (including those offered by the HOA or management company) such as registration services, rentals on a daily or short-term basis, daily cleaning, central key systems, etc.

- Is professionally managed by a hotel or resort management company that also facilitates short term rentals for unit owners

- Has obtained a hotel or resort rating for its hotel, motel, or resort operations through hotel rating providers including, but not limited to, travel agencies, hotel booking websites, and internet search engines.

- Projects or HOAs that are licensed, or have a designated licensed agent, have a permit to operate, or are registered, as a type of transient housing for the rental of non-HOA owned units.

- The HOA receives revenue from, or pays expenses for, hotel type services including a registration desk/rental registration desk, or an onsite rental operator's desk, or a rental website/hosting platform

I would imagine, just like in Destin, FL, that there are plenty of cities across the country where there are front desks and management companies running a large majority of the STRs in their complex. Am I reading this correctly that if the owners of these condos decide to sell, that their buyer will either have to pay cash, get private financing, or use a local bank with a portfolio loan? Fannie and Freddie won't allow an FHA or Conventional loan on them? If so, how much do you think that will impact the market for any/all condos, whether short term rentals or private residences?! This could be huge... :(