Thinking of Selling Your Long Beach Condo? Be Prepared to Address These Questions Up Front

Long Beach HOA Exterior

As of today, in all areas of Long Beach, there are 289 properties listed as condominiums in the MLS which are active on the market. Only 49 more are in escrow, and 47 sold within the last 30 days, which leaves a lot of properties on the market.  

Sellers, if you are thinking of selling, or if you are already on the market waiting for a buyer, it is absolutely essential for you to be ready with the following answers and/or documents when you first meet with your listing agent:

• Does the HOA budget show a 10% reserve contribution to the reserves (this will be a 15% requirement as of January 1, 2027)?
• Is there any pending litigation?
• Have there been any inspections in the last 3 years? i.e., SB326, pest inspection, roof, etc?
• Has there been a reserve study within last 3 years (updates are usually done annually)?
• Are there currently special assessments, if so, not more than 15% of owners can be past due.
• Are there planned special assessments, how much per unit and what is purpose?
• Are there more than 50% investor owners? this will apply only under certain circumstances.
• Are multiple units owned by one owner or entity? No more than 2 units if HOA is 20 or less units, 21 or more units is no more than 20% investor owned.
• What type of deductible does the Master Insurance have: Per Occurrence, Per Building or Per Unit? If per unit, must ensure that the deductible does not exceed 5% of the coverage limit
  - Must include 100% Replacement cost
  - Must include Wildfire coverage, exclusions cannot be on policy. If it is
  excluded from the main Master Insurance, HOA must have a separate Wildfire policy which must also include 100% replacement cost coverage 

 These are important questions to know up front because a buyer's lender must have this information as soon as possible when escrow begins.  

It should be obvious that the number of condos on the market means it's a competitive market for condo buyers. The successful path to closing means being prepared with all the right information up front which will assist the buyer's agent to initially find projects eligible for their buyer. Fannie Mae conventional loans in particular will be fully reviewing HOA documents, as of August 3, 2026, which is important because on the whole there are more properties closed with conventional loans. Sellers in condo transactions already are required to provide documents to the buyer as per the California Civil Code 2045, but the items above are important to assess at the time of taking a listing.

I have helped many clients with condo closings, so please contact me, or your lender if you already have one, about the items in this post. 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Reminder: HOA Condo Mortgage Rules Are Changing for Condo Sales

Pool and spa area of HOA condos

Effective August 3, 2026, Fannie Mae and Freddie Mac have new rules for their mortgage underwriting in condominium buildings. 

The California balcony inspection law was one measure enacted after the condo building collapse in Florida just a few years ago. Now Federal Housing Finance Agency (FHFA) is addressing the insurance issues and repairs getting done when reserves are underfunded. 

There used to be a "limited review process" allowed in as many as 40% of loans nationwide, but no longer. The Full Review process is now required which requires lenders to look at the HOA's financial position, budgeted reserves and owner dues delinquencies.

The new review process means that the HOA budget must must include the highest reserve allocation in the HOA reserve study (required under California law) to cover costs identified.

Therefore, starting January 4, 2027, lenders must review the budget and confirm that 15% of annual assessment income is allocated to reserve fund for future maintenance and repairs. That doesn't mean that the entire 15% must actually be in the account, because some may have already been spent for annual repairs, but they must see the 15% allocation in the budget.  This is an increase from the 10% which was in effect for many years previous.

So buyers and sellers must be prepared for loan approval to take longer than before, and ideally, the HOA property manager will be as prompt as possible in getting the HOA documents to the lender, or the HOA Board will if there is no property manager.  Sellers will want to be aware of timelines and be in touch with their Boards about any compliance issues during this period, and buyers should be in touch with their lenders about any approval questions.

This is one of the biggest changes to come along in HOA approval process, and this, along with insurance, are reasons for some units needing a little more time to get through escrow. It's important for sellers to know that should their HOA not have the budget properly reflect the 15% reserve amount, as well as outstanding balcony inspection and repair issues, that it may mean a buyer will not qualify for conventional or even FHA loans, until the requirements are met.  

If you  would like more information about these requirements, this would be a good time to consult with your mortgage lender (some are conducting webinars about this topic), or go to https://singlefamily.fanniemae.com/media/44986/display. 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

What Are Appraisal-Free Mortgages? Starting Soon

Fannie Mae (Federal National Mortgage Association since 1938) and Freddie Mac (Federal Home

Get good grades and you get an easier loan

Loan Mortgage Corporation since 1970s) are both government sponsored enterprises (GSEs).  Freddie Mac "buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market." (Wikipedia).  Fannie Mae's "purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on locally based savings and loan associations (or "thrifts")." (Wikipedia)

So in other words, both entities buy back mortgage loans to resell to investors.  In order to do that, mortgage loans made to new home buyers through various lending institutions are often completed under the guidelines of either or these two entities. 

The appraisal process is a key feature or the mortgage loan process, as the loan must be shown to be a good risk for the price agreed upon between buyer and seller, but that appraisal has often been a source of contention especially when market prices are moving up  rapidly. In addition, changes to the mortgage loan process in recent years has lengthened the time taken for many loan to get completed due to new lending guides required by the Consumer Financial Protection Bureau to protect borrowers.

So, beginning in 2016, certain refinance mortgages by Fannie Mae were approved for "appraisal free" loans.  Now, both Freddie Mac and Fannie Mae are jumping onto the bandwagon to offer mortgage purchase loans with internal automated appraisals which may save 10 days off escrow time and $500 to the borrower.

But this will not work for every borrower--the automated process will look at the borrower's loan-to-value (lower loan is better), the borrower's FICO scores and other determining factors about their application in order to determine the eligibility for the appraisal-free process.  Does this mean there's no calculation on the value of the property? No, because "Collateral Underwriter uses statistical models and algorithms built on a database of over 26 million appraisals to evaluate appraisal quality and drive greater confidence in the valuation of properties securing the loans acquired by Fannie Mae." 

So given that application and property value targets are met in this process, the buyer may obtain a Property Inspection Waiver on properties with low loan-to-value ratios. See Housing Wire
article. Fannie Mae does believe that the majority of mortgages will still require a traditional appraisal, however, for the right buyer, appraisal free transactions will ease their property purchase!