The shortcut that financed 40% of condo sales ended on August 3
The shortcut that financed 40% of condo sales ended on August 3
2026-09-10 · Kansas · Compliance
Since August 3, a buyer of a Kansas condominium unit can no longer get a conventional loan on the strength of a large down payment and a short questionnaire. Fannie Mae retired the Limited Review process for loan applications dated on or after that date, in Lender Letter LL-2026-03 issued March 18, 2026.1
Because Kansas has no state condominium-financing regime of its own, secondary-market underwriting standards are the operative rules for whether units in a Kansas project can be sold, and this is the largest change to them since the post-Surfside tightening began.
What Limited Review was
A streamlined project review. Where a borrower put enough money down, the lender could approve the project on a short-form basis, without the full documentary examination of the association's budget, reserves, insurance, litigation status, investor concentration and delinquency rates. According to figures circulated by the Community Associations Institute, it accounted for roughly 40 percent of all condominium project reviews.2
Established projects that would previously have qualified must now be reviewed under Full Review, or under a Waiver of Project Review where one is available.
What replaced it, and the one softening
Full Review means the lender examines the project itself: budget and reserve allocation, insurance including deductibles, pending litigation, delinquency rates, commercial and investor concentration, and the presence of significant deferred maintenance or unsafe conditions. It also means checking the project's status in Fannie Mae's Condo Project Manager database, where projects flagged as ineligible are recorded.
Fannie Mae did move in the other direction on one point. In the same March 2026 letter it expanded the streamlined Waiver of Project Review to projects with ten or fewer units, and retired the 50 percent investor concentration limit for established projects under Full Review.3 For the small Kansas condominium regimes that are common outside the metros, that is a genuine easing.
Why this reaches associations and not just lenders
Because the lender's questions go to the association, and the association's answers determine whether the sale closes.
The practical shift for a Kansas board
An association's paperwork has quietly become part of its owners' property values. Under Limited Review the association could be disorganised and it rarely mattered; under Full Review the association is examined on every single transaction.
Answer the questionnaire promptly and accurately. A lender's project questionnaire that sits unanswered for three weeks is a delayed closing, and increasingly a lost buyer. Boards that treat these as an administrative nuisance for the manager to get to eventually should reclassify them.
Know what is disqualifying before a lender tells you. The recurring hard stops are inadequate reserve allocation, insurance that does not meet the standard, significant deferred maintenance or unsafe conditions, and delinquency levels above threshold. Each of those is something a board can see coming a year out in its own budget and inspection records.
Understand what “unavailable” means. Fannie Mae's Condo Project Manager database records projects determined ineligible. A project on that list cannot be financed conventionally at all, which does not merely slow sales — it moves the whole project to cash buyers and repricing. The database is not publicly browsable, so an association usually discovers its status through a lender, and the way to find out is to ask a local lender to check rather than to wait.
The Kansas-specific angle
Kansas imposes no statutory reserve requirement, no statutory reserve study requirement, and no structural inspection mandate on condominiums. The Kansas Uniform Common Interest Owners Bill of Rights Act requires an annual budget under K.S.A. 58-4620 and does not prescribe what must be in it.4
So a Kansas condominium association can be entirely compliant with Kansas law and simultaneously unfinanceable. That gap is not new, but Limited Review used to paper over it on a large share of transactions. It no longer does.
Kansas's small condominium regimes deserve a second look here, because they may come out ahead. A project of ten units or fewer that can use the expanded Waiver of Project Review faces less scrutiny than a mid-size project that has just lost its shortcut. The communities most affected are the ones in the middle: too large for the waiver, previously reliant on Limited Review.
A board's options in the next quarter
Assemble the Full Review packet once and keep it current: the current budget showing the reserve allocation as a percentage of assessment income, the most recent reserve study, the master policy declarations page with deductibles stated, a current delinquency report, a statement of any litigation, and a note of any known deferred maintenance and the plan for it. Every lender will ask for the same things.
Then ask a lender who writes loans in your community whether the project is currently reviewable. That answer is worth more to owners than any board report.
What to watch next
Watch the first Kansas closings that fall through on project review. This is a change felt one transaction at a time, and the signal will be a unit that sits while comparable non-condominium listings move.
Related Kansas HOA Topics
- Fannie Mae Lender Letter LL-2026-03 (March 18, 2026) — condo project eligibility and insurance policy changes ↩
- Fannie Mae's New 2026 Condominium Lending Guidelines — Michigan Community Association Law Blog, May 11, 2026 ↩
- 2026 Fannie Mae and Freddie Mac condo rule changes: key dates ↩
- K.S.A. 58-4620, Adoption of budget; special assessments — Kansas Office of Revisor of Statutes ↩
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