Condo litigation
Not every lawsuit kills conventional financing—but structural, safety and material financial litigation can.
Fannie ineligible litigation
Fannie generally treats certain pending litigation involving the HOA, developer or sponsor as ineligible when it relates to safety, structural soundness, habitability or functional use of the project.
Minor litigation can be acceptable
Examples can include certain localized damage claims, collection/foreclosure actions or matters that have already been remediated and do not create material adverse impact, when documentation supports the conclusion.
Construction defect cases need care
Construction-defect litigation is not automatically minor merely because the HOA is the plaintiff. The lender must evaluate what defects are alleged, whether repairs are complete and the potential impact on the project.
Official guide baseline
Fannie Mae Selling Guide · Freddie Mac Seller/Servicer Guide
Condo eligibility is both loan-level and project-level. A strong borrower does not cure an ineligible project.