2026-09-10 · Massachusetts · Compliance

What happened. The rule that actually governs reserve funding in Massachusetts is not a statute. It is a lending standard, and it just got stricter.

Fannie Mae issued Lender Letter LL-2026-03 on 18 March 2026, coordinated with Freddie Mac Bulletin 2026-C, overhauling condominium project eligibility.¹ The change with the longest reach:

• The minimum replacement reserve rises from 10 percent to 15 percent of annual budgeted assessment income, effective 4 January 2027
• The exception: no percentage is required if the association has a reserve study updated within three years and funds at that study's highest recommended level
• The baseline funding method is no longer permitted for that exception

Why this is the operative reserve rule in Massachusetts

Because there is no other one. Massachusetts has no statutory reserve funding requirement and no mandatory reserve study, at any association size. The only reserve mandate filed in the 194th General Court — section 4 of S.980 and H.4826 — died with those bills.

So for a Massachusetts association the sequence runs: the master deed and trust instrument say what they say, trustee fiduciary duty supplies a general standard, and the secondary mortgage market supplies the number.

What non-compliance costs

A project that falls outside eligibility does not get fined. Its units become harder or impossible to finance conventionally, which shows up as failed sales, lower prices, and owners who cannot refinance. Fannie Mae backs a large share of the U.S. mortgage market, and its Condo Status Finder now lets a lender check a project's status directly.

1. CAI Advocacy, what Fannie Mae and Freddie Mac's policy changes mean for condominium associations, lenders and homeowners ↩
2. Boston.com, condo fees are apt to go up, and experts say it's about time, 17 April 2026 ↩
3. Fannie Mae Lender Letter LL-2026-03 (primary document) ↩