A Secret Mortgage Blacklist Is Leaving Homeowners Stuck with Unsellable Condos

https://www.wsj.com/finance/regulation/condo-sales-home-insurance-crisis-a921362b

18 18 1 year ago

PaulHoule4• 1 year ago

I can't believe anybody buys a condo, it's practically a case study for something for which governance can't possible work

https://en.wikipedia.org/wiki/Collective_action_problem

toomuchtodo3• 1 year ago

I don't agree with this broad stroke. I own several condo units (to provide affordable housing), but also put the time and effort in to ensure good governance of the board. I see the budgets, the reserves, and make sure responsible people run the community.

The problem in Florida was condo owners, by and large, wanted to punt on the costs into the future to live an experience they could not otherwise afford (deferring maintenance expenses that turned out to be load bearing, quite literally). Those costs are now catching up, through statute (mandating appropriate reserves), as well as climate risk impacts (whether through higher insurance costs or complete lack of insurability).

PaulHoule4• 1 year ago

That's kinda human nature. Look at how much resistance people have to replumbing our energy economy so it doesn't blow up our ecosystem.

josefritzishere3• 1 year ago

The problem with Hobbs/Hume's take on "the Collective Action Problem" is all of the times people do work collectively. He has a sound objective theory which simply falls apart when you observe the world.

PaulHoule4• 1 year ago

There are certain scenarios that work, where the incentives are properly aligned in time, like the Invisible Hand scenario described by Adam Smith.

When it is possible to steal from the future, however, it's another thing. The collective action problem linked there is about the problems a group has acting in its own interest when control is too atomized. A group like

https://en.wikipedia.org/wiki/Koch_network

is a political activist organization because the people who care about the results can defund it if it veers from its goal, whereas membership organizations like

https://en.wikipedia.org/wiki/Greenpeace

https://en.wikipedia.org/wiki/Sierra_Club

ultimately become organizations that steal from their members because of the problems described here:

https://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty

If an apartment building is owned by a rich individual the government can make them put up the cash or get a loan or raise the rent (some combination of which, one way or another private capital provides degrees of freedom that can part of the answer. In the case of the condo the individuals don't have the money, they can't get a loan, they can't sell their shares in a failing building, etc.

JumpCrisscross2• 1 year ago

it's practically a case study for something for which governance can't possible work

Why can't a condo work while a small town can?

howard941• 1 year ago

Personal animus and conflicts are likely in the very small world of a condo association meeting

SirFatty• 1 year ago

A town won't put a lean on your house because you painted your shed the wrong color.

giardini• 1 year ago

Condos have operated successfully for hundreds of years. Being an officer is sometimes a struggle but good officers make good condominiums.

Anyone who lives in our society and champions pure democracy might benefit by spending six months as a condominium officer.

My personal experience is that roughly one-third of condominium owners are normal, one-third are mad (literally clinically insane) and the last third too dumb to participate [Which is, now that I think about it, about the same as my experience with the general population]. Nonetheless all do participate at one time or another and so those of us who are normal get to view and learn. That is democracy in its fullest form.

The above, to some degree, may help explain why the USA's founding fathers opted for a representative democracy rather than a pure democracy. Perhaps Hamilton or Franklin et al once served on a condominium board!8-))

josefritzishere3• 1 year ago

I think the problem here is not that some properties are insurable, which seems unavoidable in some hish-risk areas, but that the list is secret. The list should be public information.

readthenotes12• 1 year ago

Except it's not secret...

"She said the firm provides an online tool that allows lenders to check whether it accepts loans from a given project. Freddie has similar insurance requirements to Fannie. "

readthenotes12• 1 year ago

So the complaint is that Fannie Mae and Freddie Mac are leaving homeowners stuck because they have rationalized the insurance requirements for condominiums after the Surfside collapse.

In other words, they are trying to keep future homeowners from buying a disaster without being properly insured.

There is very little secret about it according to the article, other than surprise that the new requirements exist.

A Secret Mortgage Blacklist Is Leaving Homeowners Stuck with Unsellable Condos

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