03/23/2026
LONG POST - BUT IF YOU SELL CONDOS, YOU NEED TO READ. #3 is good news, but the rest are pretty rough!
NAMB President Kimber White — a 40-year veteran of the mortgage industry and someone who has spent 20 years specializing in condo financing — wants you to know: the new Fannie Mae condo guideline changes will adversely affect the housing market, not just in Florida, but throughout the entire United States. The ripple effects will be felt by current homeowners, first-time buyers, real estate professionals, and lenders in every corner of this country.
That is precisely why NAMB could not sit on the sidelines. NAMB formally submitted a letter to FHFA Director Bill Pulte expressing serious concerns about these sweeping changes. NAMB's position is clear: while the administration has repeatedly stated its commitment to affordable housing and first-time homebuyers, these condo guidelines directly contradict that mission. Rather than expanding access to homeownership, they erect new barriers in front of the very buyers who need help the most. NAMB is calling on FHFA leadership to reconsider the timeline, the scope, and the real-world impact of these changes — before hundreds of thousands of condo owners and aspiring buyers are left without options.
NAMB felt the urgency of this moment and took swift action — because waiting is not an option when American homeowners and first-time buyers are at stake.
THE BIG CHANGES
Fannie Mae published Lender Letter LL-2026-03 on March 18, 2026. Here is a plain-language breakdown:
1. The "Limited Review" Process Is Gone
Fannie Mae's lender letter officially retires the "limited review" process for established condo projects, effective for loan applications dated on or after August 3, 2026. Moving forward, lenders will be required to conduct "full reviews" on all established projects — meaning more documentation, more time, and more scrutiny on every condo transaction.
2. Reserve Requirements Are Going Up
Fannie Mae and Freddie Mac are increasing the minimum reserve funding requirement from 10% to 15% of the annual budget, effective January 4, 2027. Associations must follow the highest recommended funding level identified in reserve studies. The baseline and threshold funding methods are no longer permitted.
3. Roof Insurance Rules Just Got More Flexible
Updated guidelines now allow for actual cash value (ACV) coverage on roofs for single-family homes and condominiums, rather than requiring full replacement cost value (RCV). This reverses a controversial 2024 policy that was pricing many HOAs out of the market.
4. Deductible Cap Added
The maximum allowable per-unit deductible for a master property insurance policy has been capped at $50,000.
5. Small Condo Project Waiver Expanded
Fannie Mae is expanding eligibility for a Waiver of Project Review to include new and established projects with ten or fewer units. Previously, this waiver only applied to projects with four or fewer units — a meaningful expansion for smaller buildings.
NEW CONSTRUCTION CONDO RULE CHANGES — LL-2026-03
1. Florida PERS Requirement Retired
Fannie Mae is retiring the requirement that new or newly converted projects with attached units in Florida must be submitted to Fannie Mae's Project Eligibility Review Service (PERS). Approval of these projects, like all other new projects with attached units, can now be reviewed under the lender-delegated Full Review process. Previously, Florida new construction faced an extra layer of review that no other state faced — that mandatory PERS submission is now gone.
2. New Construction Still Requires Full Review — No Shortcuts
New and newly converted condo projects are considered higher risk and have always required a Full Review. That has not changed. New construction projects cannot use the Limited Review process and are not eligible for the new Waiver expansion.
3. The 50% Presale Requirement Remains
The presale requirement — that at least 50% of the total units in the project or subject legal phase must have been sold — remains in place. Developers must still hit that threshold before buyers can obtain conventional financing.
4. Investor Concentration Limit Retired
Fannie Mae is retiring the investment property concentration limit of 50% in established projects reviewed under the Full Review process — signaling more flexibility on investor unit ratios going forward.
THE PROS — What's Working in Our Favor
• Insurance relief is real and immediate. Allowing ACV roof coverage ends a major bottleneck. Hundreds of condo buildings previously ineligible for conventional financing may now qualify — helping buyers and sellers who were stuck.
• Deductible cap creates clarity. Capping the per-unit master policy deductible at $50,000 gives lenders a clear standard and removes ambiguity that was creating inconsistent lending decisions across markets.
• Waiver expansion helps small buildings. Projects with 5–10 units can now bypass the full project review process under the right conditions — reducing friction for buyers in smaller condo communities.
THE CONS — What's Raising Serious Concerns
• End of Limited Review = More Time and Cost for Everyone. Lenders will need to collect additional documentation to verify condo association compliance for every single loan — a move that will cost significant time and resources, with the burden ultimately falling on homebuyers and sellers.
• Higher Reserve Requirements Will Price Out HOAs and Trigger Ineligibility. Raising the mandatory reserve threshold from 10% to 15% sounds responsible on paper — but many existing condo associations simply cannot meet this threshold in such a short period. The result? Buildings already on Fannie Mae's books could become newly ineligible. Current owners could find themselves unable to sell, unable to refinance, and watching property values drop because conventional financing is no longer available in their building.
• First-Time Homebuyers Lose Affordable Options. Condos are often the most attainable entry point into homeownership. When projects become ineligible en masse, first-time buyers lose access to the very properties that fit their budget. The administration cannot champion affordable housing and first-time buyers while simultaneously implementing guidelines that make those homes harder — and in many cases impossible — to finance.
• These Changes Will Create More Instability, Not Less. The stated goal is to strengthen condo communities — but the practical outcome may be the opposite. HOAs that were functioning, paying their bills, maintaining their properties, and serving their residents will suddenly find themselves cut off from the conventional lending market. That doesn't make them stronger. It destabilizes entire communities.
• This Actually Weakens Fannie Mae's Own Collateral Position. When more projects become ineligible, buildings already in Fannie Mae's existing loan portfolio become less liquid and harder to value. Rather than shoring up collateral, Fannie Mae could end up holding loans on assets in financially weakening communities — because the very HOAs they're trying to bring into compliance don't have the resources to get there.
• The Transition Timeline is Tight. With the limited review retirement effective August 3, 2026 and the reserve increase kicking in January 4, 2027, lenders, HOAs, and borrowers have very limited runway to prepare — and most don't even know these changes are coming.
BOTTOM LINE FOR BROKERS/AGENTS:
Get familiar with the full review requirements now — before August. .
