Fannie Mae and Freddie Mac Condo Project Standards

Section 1: Overview — The standards that decide whether a condo is financeable

Two private corporations under federal conservatorship, Fannie Mae and Freddie Mac, write the eligibility rules that decide whether a buyer can purchase or refinance a condominium or cooperative unit with a conforming loan.¹ These rules are not statutes. They live in Fannie Mae's Selling Guide and Freddie Mac's Single-Family Seller/Servicer Guide, and they bind by contract the lenders who sell loans to the two enterprises. No board signs either guide, and no association carries a legal duty to follow them.² They still operate as a de facto national condo code, for a financial reason rather than a legal one. Conforming loans fund most condominium purchases, so a project that fails eligibility loses access to that financing, and unit values, resales, and refinancing follow it down.

After the 2021 Champlain Towers South collapse in Surfside, Florida, Fannie Mae issued Lender Letter LL-2021-14 and Freddie Mac issued Bulletin 2021-38. Both imposed temporary requirements covering significant deferred maintenance, unsafe conditions, repairs directed by a regulatory authority, and special assessments, and both enterprises folded those requirements into their permanent guides in 2023.³ A board meets these standards across several categories: structural condition and critical repairs, reserves, special assessments, insurance, ownership concentration, and litigation.⁴ GSE eligibility is a separate status from FHA and VA condo approval, which run through independent government regimes. The sections that follow set out where the standards live, what they require, and what boards must be able to produce.

Section 2: The standards and where they live

2A. Who writes the standards and what force they carry

Fannie Mae and Freddie Mac are shareholder-chartered corporations that the Federal Housing Finance Agency placed under conservatorship in September 2008, and FHFA has served as their conservator since.¹ Their project eligibility requirements are contractual terms binding approved sellers, who make representations and warranties that each project meets the applicable requirements before they deliver a loan.² An association never stands in privity with either enterprise. The standards reach an association through one channel only, financeability. If a project does not qualify, lenders cannot sell loans secured by its units to the enterprise, and conforming financing dries up for that project.⁵

The two enterprises run different review structures. Fannie Mae determines eligibility through the lender-delegated Full Review process (Selling Guide B4-2.2-02), the Project Eligibility Review Service, known as PERS (B4-2.2-06), for certain new projects and exception requests, and a Waiver of Project Review (B4-2.1-02) for lower-risk transactions.⁶ Fannie Mae retired its Limited Review process for loan applications dated on or after August 3, 2026.⁴ Freddie Mac uses four paths, Established Project (Guide Section 5701.5), New Project (5701.6), Reciprocal (5701.9), and Exempt From Review (5701.7), plus Condo Project Advisor, which returns Project Assessment Request findings and a "Project Certified" status (5701.10).⁷ Freddie Mac retired its Streamlined Review path effective August 3, 2026.⁸ The more rigorous the review, the more project-level financial and physical documentation a lender must confirm.

The document a board actually fills out is the standardized questionnaire the two enterprises released jointly, the Condominium Project Questionnaire — Full Form (Fannie Mae Form 1076 / Freddie Mac Form 476) and the Short Form (Fannie Mae Form 1077 / Freddie Mac Form 477).⁹ Lenders may use the forms or not, and the two enterprises keep their eligibility policies separate.⁹ The questions added after Surfside ask whether the project needs critical repairs, whether an evacuation order is in place, whether unfunded repairs exceed a per-unit threshold, and what the project's special assessments and inspection findings show.¹⁰ Answering a questionnaire documents facts for a lender. It does not amount to compliance with a law.

2B. The post-Surfside condition and repair standards

Lender Letter LL-2021-14, dated October 13, 2021, made condo and co-op projects of five or more attached units ineligible for sale where the project carried significant deferred maintenance, an unsafe condition, or a directive from a regulatory authority or inspection agency to make repairs, and it required lenders to review current and planned special assessments. Freddie Mac Bulletin 2021-38, dated December 15, 2021, imposed parallel "Critical Repairs" requirements.³ Fannie Mae made the requirements permanent through Selling Guide Announcement SEL-2023-06 on July 5, 2023, and they now sit in B4-2.1-03, Ineligible Projects.¹¹

Fannie Mae defines projects in need of critical repairs as those needing repairs that significantly affect safety, soundness, structural integrity, or habitability, or the financial viability or marketability of the project, and it lists material deficiencies that could contribute to system failure within one year, mold or water intrusion, advanced physical deterioration, failed mandatory inspections, and any unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months.¹² Routine repairs that are preventative or part of normal capital replacement, and damage isolated to one or a few units, fall outside the definition.¹² A project under an evacuation order because of an unsafe condition remains ineligible until the condition is remediated.¹² Freddie Mac uses a "Critical Repairs" definition and a "Routine Repairs and Maintenance" carve-out in Guide Section 5701.3.¹³

For special assessments, Fannie Mae requires the lender to determine the purpose, the approval and execution status, the original and remaining amount, and the expected payoff date. If an assessment ties to a critical repair that no one has remediated, the project is ineligible.¹² Where a structural or mechanical inspection was completed within three years of the lender's review date, the lender must obtain and review it, and the report cannot show unaddressed critical repairs, evacuation orders, or required regulatory actions.¹² Lenders build their answers from board meeting minutes, engineer reports, inspection reports, reserve studies, and repair and special-assessment lists.¹²

2C. The eligibility standards that turn on money and ownership

Fannie Mae's Full Review requires the budget to allocate at least 10% of annual budgeted income to replacement reserves, or a qualifying reserve study in lieu of that allocation. The minimum rises to 15% for loan applications dated on or after January 4, 2027 under LL-2026-03, and the baseline funding method is no longer permitted.¹⁴ Freddie Mac requires at least 10% of the budget for reserves, allows a reserve study alternative dated within 36 months, and moves to the same 15% figure on the same January 4, 2027 timeline.¹⁵ Both treat more than 15% of units being 60 or more days delinquent on assessments as a disqualifier under full review.⁶

On insurance, Fannie Mae requires the master property policy to cover at least 100% of the estimated replacement cost value of the project improvements and to settle on a replacement cost basis. Under LL-2026-03, Fannie Mae caps the master policy's per-unit deductible at $50,000 for all required perils, retires the inflation guard requirement, and no longer requires roofs to be insured on a replacement cost basis, effective for applications dated on or after July 1, 2026.¹⁶ Fannie Mae requires a unit owner (HO-6) policy when the master policy does not cover the unit interior or carries a per-unit deductible, and it caps the unit policy deductible at the greater of 5% of coverage or $2,500.¹⁶ Fannie Mae also requires fidelity/crime insurance for condo and co-op projects, subject to exceptions that include projects of 20 units or fewer, at a minimum of three months of assessments on all units where the HOA follows specified financial controls.¹⁷

Fannie Mae retired its 50% investor concentration limit for established projects under Full Review effective March 18, 2026, while the single-entity ownership limit still applies: no single entity may own more than two units in projects of 5 to 20 units, or more than 20% of units in projects of 21 or more units.⁴ Commercial or non-residential space may not exceed 35% of the project.¹² Projects carrying pending litigation that relates to safety, structural soundness, habitability, or functional use are ineligible, with carve-outs for minor matters such as non-monetary disputes, insured claims, and cases where anticipated damages do not exceed 10% of funded reserves.¹² Hotel and motel operations, mandatory rental pooling, transient and short-term-rental characteristics, timeshares, and continuing-care facilities all count as ineligible project characteristics.¹² Fannie Mae records its determinations in Condo Project Manager, where a project can carry an "Unavailable" status that lenders can see and the public cannot, and loans in such projects are ineligible.¹² The Miami Herald reported that Fannie Mae listed 1,438 condo buildings as ineligible for its backing across Florida, with 696 in Miami-Dade, Broward, and Palm Beach counties as of March 2025, citing data from the law firm Allcock Marcus. Any such count comes from journalism, not from the enterprises, and the documented route back to eligibility runs through remediation, lender submission, and re-review.¹⁸

Section 3: What the project standards mean boards must maintain and disclose

The items below set out what the standards require a lender to confirm, and therefore what a board must be able to produce. None of them is a legal duty the board owes. Each is a condition of the project's financeability.

A. Physical condition and repair records

Boards should be able to produce structural and mechanical inspection reports completed within three years, because a lender must review any such report and confirm it shows no unaddressed critical repairs, evacuation orders, or required regulatory actions.¹² Where repairs are complete, a lender uses an engineer's report or a similar document to confirm that the safety, soundness, structural integrity, or habitability concern is resolved.¹² Board meeting minutes and repair lists sit among the documents Fannie Mae identifies for determining physical-condition compliance.¹²

B. Financial records and reserves

Lenders confirm reserve adequacy from the budget, so boards need a current operating budget showing the replacement-reserve allocation, at least 10%, rising to 15% for applications dated on or after January 4, 2027, or a reserve study dated within the required window and funded at the study's highest recommended level.¹⁴ For each current or planned special assessment, a lender must document the purpose, the status, the original and remaining amounts, and the payoff date, so boards should keep that record ready.¹² Delinquency figures matter too, because more than 15% of units 60 or more days past due disqualifies a project under full review.⁶

C. Insurance and ownership documentation

Boards should keep master policy declarations evidencing replacement-cost coverage and the per-unit deductible, since lenders must confirm the master policy covers at least 100% of estimated replacement cost value and, effective July 1, 2026, that the per-unit deductible does not exceed $50,000.¹⁶ Projects above 20 units need fidelity/crime coverage documentation.¹⁷ Ownership and rental data support the single-entity limit and the other ownership tests a lender must verify.¹²

D. Questionnaire practice and disclosure exposure

The board or the management company typically completes the questionnaire from association records.¹⁰ The form calls for specific, current data on finances, delinquency, reserves, insurance, and legal status.¹⁰ An inaccurate or incomplete answer can stall or defeat a loan that a buyer or owner is counting on, so records retention and coordination with counsel and management support accuracy. This is a documentation practice, not legal advice, and no board should shape an answer to produce a result the facts do not support.

Section 4: Recent guide changes, policy activity, and legislative attention

A. Recent guide updates and announcements

B. Regulator and market developments

C. Legislation and active debates

H.R.1209, the End of GSE Conservatorship Preparation Act of 2025, would require Treasury to report on proposals to end the Fannie Mae and Freddie Mac conservatorships, a change that would affect who ultimately sets these standards.²¹ H.R.6644, the Housing for the 21st Century Act, passed the House on February 9, 2026, and addresses housing counseling and covered mortgage loans, including individual condominium and cooperative units.²²

Section 5: Interaction with state law and related coverage

The standards are private contract terms, not statutes, so every legal duty a board owes comes from state law. Reserve-study and structural-inspection mandates, insurance minimums, budget approval, and resale disclosure all originate in the state matrix, not in either guide.² The two layers feed each other, because the state inspection and reserve statutes adopted after Surfside often generate the very documents a lender questionnaire asks a board to produce. GSE eligibility remains distinct from FHA and VA condo approval, which run through separate government regimes. For the binding obligations behind these documents, readers should consult the state Condo Safety Inspections, Reserve Studies, Insurance Requirements, Estoppel & Resale, and Budget Approval columns.

HOA Weekly's coverage of GSE project standards updates quarterly as the Selling Guide and the Seller/Servicer Guide change. The state-level obligations that generate the underlying documents run throughout the state matrix, and the Condo Safety Inspections, Reserve Studies, and Insurance Requirements columns in particular track the mandates behind the records a lender questionnaire requests.

Footnotes

1. FHFA, Fannie Mae and Freddie Mac conservatorship (2008) ↩
2. Fannie Mae Selling Guide A2-2, Contractual Representations and Warranties ↩
3. Fannie Mae Lender Letter LL-2021-14 (Oct. 13, 2021) ↩
4. Fannie Mae Lender Letter LL-2026-03 (March 18, 2026) ↩
5. Freddie Mac Guide Section 5701.2 ↩
6. Fannie Mae Selling Guide B4-2.2-02, Full Review Process ↩
7. Freddie Mac Condo Project Advisor FAQ; Guide Sections 5701.5–5701.10 ↩
8. Freddie Mac Bulletin 2026-C (March 18, 2026) and Bulletin 2026-6 (May 6, 2026) ↩
9. GSEs Standardize Condominium Project Questionnaires (Forms 1076/476 and 1077/477) ↩
10. Fannie Mae Form 1076, Condominium Project Questionnaire ↩
11. Fannie Mae Announcement SEL-2023-06 (July 5, 2023) ↩
12. Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects ↩
13. Freddie Mac Guide Section 5701.3, Ineligible Projects ↩
14. Fannie Mae B4-2.2-02 and LL-2026-03 reserve requirements ↩
15. Freddie Mac Guide Section 5701.5, reserve requirements ↩
16. Fannie Mae LL-2026-03, master and individual insurance requirements ↩
17. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
18. Miami Herald (via AOL), "'Perfect storm.' Hundreds of South Florida condos now on secret mortgage blacklist," citing Allcock Marcus data (March 2025) ↩
19. Freddie Mac, condo eligibility transparency and appeal process (effective Feb. 26, 2024) ↩
20. HousingWire, "Housing groups warn FHFA on GSE condo lending changes" (July 9, 2026) ↩
21. H.R.1209, End of GSE Conservatorship Preparation Act of 2025 ↩
22. H.R.6644, Housing for the 21st Century Act ↩