2026-09-27 · Federal · Compliance

What happened. The condominium changes Fannie Mae and Freddie Mac announced on March 18, 2026 are now in force. Fannie Mae's Limited Review and Freddie Mac's Streamlined Review are no longer available for loans with application dates on or after August 3, 2026, and Fannie Mae's Selling Guide sections on project standards and insurance carry rewritten text dated August 5, 2026.¹²

The review paths that remain

Fannie Mae's project-standards section now lists Full Review, the two Fannie Mae Review (PERS) paths, FHA approval, and “Project Review Waived” — Limited Review no longer appears.¹ Freddie Mac's condominium FAQ states that sellers “may only utilize Streamlined Review if the Application Received Date for the condominium unit mortgage is prior to August 3, 2026.”²

At the small end the rules loosened. Fannie Mae's review waiver now covers “detached condo units,” “units in a two- to ten-unit condo project,” and “attached units in a five- to ten-unit condo project that is not part of a larger development.”¹ Freddie Mac's Bulletin 2026-6 removed the critical-repair and evacuation-order checks for mortgages on units in five- to ten-unit projects not part of a master association.³

Reserves and reserve studies

Fannie Mae's Full Review still requires a budget allocating “at least 10% of the budget” to replacement reserves as of the August 5 Guide text.⁴ Freddie Mac's FAQ adds two limits for applications on or after August 3: when a reserve study is used as an exception to the budget test, the study's “baseline” funding method (which only keeps the reserve balance above zero) cannot be used, and “special assessments cannot be used in lieu of the 10% budget reserve allocation.”²

Fannie Mae's March lender letter also set a rise in the minimum reserve allocation from 10% to 15% of the budget for applications on or after January 4, 2027, as described in practitioner summaries of the letter.⁵ That step is not yet reflected in the Guide sections dated August 5.

Insurance

Fannie Mae's master-policy section now provides that “roofs must be insured, but do not have to be insured on a replacement cost basis,” sets “the maximum allowable per unit deductible” at $50,000 per unit, and keeps the overall deductible cap at 5% of the master policy's coverage amount.⁶ Where the master policy carries a per-unit deductible for a peril, the unit owner's HO-6 policy must cover that peril, and the owner's minimum coverage includes “the amount of the per unit deductible.”⁷

What did not change

Projects “in need of critical repairs” remain ineligible at both companies. Fannie Mae's definition still includes “any unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months,” and Freddie Mac's August 2026 fact sheet still lists critical repairs and evacuation orders as ineligible project characteristics.⁸

What it means operationally

For projects of eleven or more units that previously cleared the shorter review, lenders now apply the full budget, reserve, insurance and critical-repair analysis on each loan. In practice that makes the association's adopted budget, its reserve study method, its master-policy deductibles and its answers on the lender questionnaire the documents that decide whether a unit can be financed with a conventional loan sold to either company.

The delay request

Mortgage and community-association groups, including the Community Associations Institute, asked FHFA Director Bill Pulte in June and July to postpone the changes by at least a year.⁹ National Mortgage News reported that FHFA responded that the companies would implement “on time.”¹⁰ The August 3 retirements took effect as scheduled; the January 4, 2027 reserve step is the next date on the calendar.

1. Fannie Mae Selling Guide B4-2.1-01, General Information on Project Standards (08/05/2026) ↩
2. Freddie Mac, Condominium Unit Mortgage FAQ ↩
3. Freddie Mac Single-Family Seller/Servicer Guide Bulletin 2026-6 (May 6, 2026) ↩
4. Fannie Mae Selling Guide B4-2.2-02, Full Review Process (08/05/2026) ↩
5. Whiteford, client alert on Fannie Mae LL-2026-03 (May 4, 2026) ↩
6. Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements (08/05/2026) ↩
7. Fannie Mae Selling Guide B7-3-04, Individual Property Insurance Requirements for a Unit (08/05/2026) ↩
8. Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects ↩
9. National Association of Mortgage Brokers, condo financing letters ↩
10. National Mortgage News, July 10, 2026 ↩