March 20, 2026 | Mark Luis Foster
A number of changes have been announced regarding Fannie Mae and Freddie Mac loans that affect condo and townhome communities with such loans. Overall they can impact your reserve funding, insurance and the condition of the property, e.g. maintenance. Our sponsor, SJJ Law Firm, and its partner, Aaron Brooksby, wrote this summary of the changes below. Please pass this blog along to others on your board.
The following changes begin rolling out in mid-2026 and are expected to be fully in effect by 2027.
What HOA and Condo Boards Should Know About the New Fannie Mae / Freddie Mac Changes
By Aaron Brooksby, SJJ Law Firm
Fannie Mae and Freddie Mac recently announced important updates affecting condominium and townhome communities. While these changes are directed at lenders, they can have a very real impact on associations because they affect how lenders evaluate buyer financing and refinancing.
At a high level, the changes place greater focus on three things: reserve funding, insurance, and overall condition. For many communities, that means lenders may be looking more closely at whether the association is adequately funding reserves, whether the insurance structure is appropriate, and whether there are known deferred maintenance or major repair issues.
One of the most significant updates is that, for condominium projects reviewed under Fannie Mae’s Full Review process, the expected reserve contribution increases from 10% to 15% of annual budgeted assessment income. Fannie Mae also tightened its reserve-study rules, making clear that when a reserve study is used, the budget must reflect the highest recommended reserve funding amount.
The update changes some insurance requirements too. Among other things, Fannie Mae revised parts of its master-policy and unit-owner insurance standards, including deductible treatment and when owners may need their own unit-owner coverage. While some of these changes are intended to give projects more flexibility in a difficult insurance market, boards should not assume that financing standards are the same thing as legal compliance under state law or the association’s governing documents.
For board members, the practical takeaway is simple: now is the time to review reserve funding, insurance structure, and any known deferred maintenance issues before 2027 budget planning is finalized. Communities with low reserves, aging components, major repair needs, or high-deductible insurance structures may face more lender questions and more owner concerns during sales and refinances.
Boards do not need to panic, but they should be proactive. A thoughtful review now can help reduce surprises later and put the association in a better position when owners are buying, selling, refinancing, or raising concerns about assessments and insurance.
More at SJJ Law’s blog: https://sjjlawfirm.com/2026/03/19/fannie-maes-2026-insurance-and-project-standards-update/
