Bill's answer is really good. Since there is typically shared ownership,high investor concentration, and the potential for liens and lawsuits relating to an association condos and townhomes are viewed as being much riskier than a Single Family Home and therefore have much stricter requirements. So lenders need to perform much more due diligence than in the past before making a lending decision.

If a lender makes a mortgage and subsequently Fannie Mae refuses to purchase the loan from them due to not meeting guidelines then they are stuck with the loan. And I can tell you with confidence that no lender, no matter how big they are, wants to be "stuck" with a mortgage these days. One bad loan on the books can wipe out the profits on a 100 good loans.

This requirement is not new and has nothing to do with the age of the property. It is required to ensure that the Association has no current or pending lawsuits running which could affect the security of the loan. Most Lenders will not loan under any such circumstances as the consequences of the Association loosing a law suit will probably lead to significant legal expenses being passed on to the owners as higher monthly dues. This will make the potential Buyer for the complex less wiling to pay the extra fees therefore driving prices downward.
Other issues the Lender is concerned with are the state of the Associations Reserve Funds designated for long term maintenance items such as roof replacement etc. If these are no adeaquate a similiar increase in Monthly Dues is probable with the same result on resale prices.
One more problem occasionally rises when the Bank notices that they already have too many loan out on that specific complex and will not make any more.
Finally, the proportion of Owner Occupied to Rented units is a major concern to the Bank. Too many rental units is a red flag to the Loan Underwriter.

Hi Homebuyer,
right now lending criterias are changing ever so often, and are definately tightened up! A clear title doesnt mean the Buyer doesnt need to meet all the criterias a Lender will have for a condo. Yes we are facing mortgage delays as lenders need a lot more clearance of tings than before, also appraisals are taking time and new rules doesnt even allow lenders to speak with the appraisers directly!
Talk to your Lender and Realtor to guide and help you through the home buying process. If you need help, and if you DONT have a realtor, do get in touch with me.
All the Best, be well and safe,
Nina Daruwalla