2026-09-12 · Maine · Compliance

What happened. On 18 March 2026 Fannie Mae issued Lender Letter LL-2026-03, Updates to Project Standards and Property Insurance Requirements. For Maine condominium associations it is the most consequential document of the year, and Maine law has nothing to do with it.¹

Maine imposes no statutory reserve-funding requirement and no reserve-study mandate. The binding reserve rule for a Maine association is therefore whatever the secondary mortgage market says it is — and it has just moved.

The dates

• 1 July 2026 — master-policy deductible-maximum requirements apply (already in force)
• 3 August 2026 — enhanced reserve-study standards take effect; Limited Review is retired for established condominium projects; the waiver of full project review is expanded for projects of 10 or fewer units (already in force)
• 1 January 2027 — an annual insurance-coverage verification requirement begins
• 4 January 2027 — the minimum reserve allocation rises from 10 percent to 15 percent of annual budgeted assessment income, for loan applications received on or after that date

What actually changes about reserves

Two things, and the second is the one that catches associations out.

The percentage. A budget that allocates 10 percent of assessment income to capital expenditures and deferred maintenance has met the threshold for years. From 4 January 2027 that figure is 15 percent.

The reserve-study alternative is narrower. An association that falls short of the percentage has historically been able to rely on a reserve study instead. That route survives, with conditions: the study must be no more than three years old, and the budget must fund at the study's highest recommended reserve allocation amount. The prior practice of accepting “baseline funding” — a funding level that lets reserves run down toward zero while technically remaining solvent — is no longer accepted.

On the reporting available, the operative language is that budgets “must include the highest recommended reserve allocation amount identified in that study.” Fannie Mae's own Lender Letter page does not serve automated requests, so that wording reaches us through a law-firm client alert rather than from Fannie Mae directly; the figures should be checked against the Letter itself before a board budgets to them.

1. Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments ↩
2. Whiteford, Taylor & Preston LLP, client alert on Fannie Mae Lender Letter LL-2026-03 (the source for the 10-to-15 percent and highest-recommended-allocation language quoted here) ↩
3. 33 M.R.S. § 1603-113, Insurance — Maine's coverage-level floor, which is not a reserve requirement ↩