In March 2026, Fannie Mae and Freddie Mac announced significant updates to their condominium project standards and insurance requirements. These changes are critical for community associations, lenders, and homeowners in Florida. In our recent educational webinar, experts Michael Ungerbuehler and Steven Rappaport from Sachs Sax Caplan, Will Simons from Association Reserves, and Nicole Johnson from Hafer & Company shared practical, actionable strategies for navigating these new guidelines.
This panel discussion covered the elimination of the limited review process, increased reserve funding requirements, and the overall impact on condominium transactions, association budgets, and board decision-making. Attendees gained invaluable insights into what to expect and how to prepare for these evolving regulations.
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These Fannie Mae and Freddie Mac condo policy changes are not state-level mandates, such as Florida's Structural Integrity Reserve Study (SIRS) requirements, but rather federal mortgage lending requirements that impact a condominium's eligibility for financing through these government-sponsored enterprises. The core of these changes aims to ensure the financial stability and structural integrity of condominium projects, thereby mitigating risks for lenders and investors.
One immediate change was the expansion of the waiver of the full review process for condominiums with up to 10 units. This waiver, however, comes with a caveat: the condominium cannot be part of a master association or a larger development project.
While the investor concentration cap of 50% was waived for established condominiums, it remains in effect for new or newly converted projects. This means that for new developments, at least 50% of units must be sold or under contract to individuals who will use them as their primary or secondary residence, not as an investment.
A pivotal change taking effect by August 3rd, 2026, is the complete elimination of the limited review process for most condominium loans. Previously, limited reviews offered a streamlined assessment for certain loans, but under the new guidelines, all condominiums will undergo a full review. This shift implies a more thorough examination of a condominium's financial health, structural condition, and overall management practices, regardless of the down payment size. This increased scrutiny is designed to provide greater assurance to lenders and ultimately protect homeowners and investors.
Perhaps one of the most impactful Fannie Mae and Freddie Mac condo policy changes is the increase in required reserve funding. Condominium associations must now demonstrate that their reserves are funded at a 15% level, up from the previous 10%, to ensure eligibility for conforming mortgages. This requirement goes beyond the scope of state-mandated structural integrity reserves, emphasizing a more comprehensive approach to financial planning.
This underscores the importance of considering all common elements—elevators, amenities, parking lots, and hallway renovations—when assessing reserve needs. Fannie Mae and Freddie Mac's focus on robust reserve funds stems from a desire to mitigate the risk of large special assessments that could financially burden homeowners and potentially lead to mortgage defaults, a lesson learned from past economic downturns.
"Truly budgeting for your property and taking care of the whole place means not just your structural integrity reserves... Historically, reserve budgeting was much more broad and comprehensive, and it should still be that way." - Will Simons, Association Reserves
Fannie Mae maintains an internal system known as the Condo Project Manager (CPM), often colloquially referred to as the "condo blacklist." This system acts as an underwriting filter, determining whether a condominium building or HOA meets Fannie Mae's standards for reselling mortgages. If an association is listed as "unavailable," "ineligible," or "review required," it signals a red flag to lenders, often leading to a refusal to finance loans within that community. This can significantly shrink the pool of potential buyers and exert downward pressure on property values.
Several factors can lead to an association being placed on this list, including major structural issues, inadequate reserves (falling below the new 15% threshold without a supporting reserve study), insufficient insurance, or high concentrations of investors.
It is possible for an association to be removed from the blacklist. The process involves identifying the specific issues Fannie Mae has with the condo and then taking concrete steps to remedy those deficiencies.
For instance, if inadequate reserve funding is the problem, increasing the reserve funding to meet the new requirements can resolve the issue and potentially lead to removal from the blacklist.
"It is possible to get off the blacklist once you're on... you'd see which things Fannie Mae doesn't like about your condo, and then the condominium would take steps to reverse those issues." - Michael Ungerbuehler, Sachs Sax Caplan
To navigate these new Fannie Mae and Freddie Mac condo policy changes successfully, condominium associations should take proactive steps:
Immediately assess current reserve funding levels and compare them against the new 15% requirement. Develop a strategy to meet or exceed this threshold.
Continue to adhere to state-level Structural Integrity Reserve Study (SIRS) mandates, as these contribute to the overall financial health and structural integrity that Fannie Mae and Freddie Mac are scrutinizing.
Work closely with your property management team and legal counsel to identify and address any potential red flags—whether financial, structural, or related to investor concentration—before a buyer applies for a mortgage. This proactive approach can prevent delays or denials in financing.
By understanding and adapting to these updated guidelines, condominium associations can ensure they remain attractive to potential buyers and maintain access to conventional mortgage financing.
Fannie Mae and Freddie Mac gather information through questionnaires that go beyond typical state requirements. Fannie Mae also offers a "Condo Status Finder" tool for associations to check their eligibility status and identify specific issues.
Fannie Mae and Freddie Mac’s policy changes are federal mortgage lending requirements, not state-level mandates. While Florida’s Structural Integrity Reserve Study (SIRS) mandates contribute to overall financial health, the federal guidelines go further, impacting a condominium’s eligibility for financing through these government-sponsored enterprises. Associations must adhere to both sets of requirements.
Visit our blog page to explore more educational content, webinars, and resources designed to help your association understand new requirements and implement strategies for compliance
Ashley Dietz is the VP of Marketing at Campbell Property Management and has led the company’s educational and marketing initiatives since 2013. A Florida Atlantic University graduate with a bachelor’s degree in communications, Ashley specializes in community association education, digital outreach, and industry engagement for Florida HOAs and condominiums.