On March 18, 2026, Fannie Mae (FNMA) and Freddie Mac (FMAC) released updated standards for condominium loans that are sold and are underwritten by FNMA and FMAC.  Several of those standards relate to the review and underwriting process by lenders. However, several of the new requirements will impact condominium associations immediately and others as of January 4, 2027.

Important Dates and Actions to Take

In order for buyers/borrowers and developers to obtain a loan backed/underwritten by FNMA or FMAC, the actions below and dates must be complied with, otherwise your condominium unit purchase and/or the development may not qualify for the various FNMA and FMAC loan products. 

July 1, 2026 – Insurance Requirements

• The maximum unit deductible for the Master HOA property policy shall not exceed $50,000.00.
• Except for roofs, the Master HOA property policy must be on a replacement cost basis. Roofs may be based on an actual cost value.
• If the Master Association property policy has a unit deductible or does not cover all of the unit or unit improvements, then unit owners must obtain an HO-6 insurance policy or comparable coverage.

August 3, 2026 – Reserve Studies

• Lenders will be required to undertake reserve studies and more importantly confirm that HOA’s are using the highest recommended reserve fund allocation.
• Developments of 10 or fewer units may not have the same review process as larger developments.

January 4, 2027

Reserve allocation for capital expenditures and deferred maintenance must be increased to 15% of the annual budgeted income assessments.

How to Quality

Based on the foregoing, HOA’s and management companies that want to make sure their Associations qualify for FNMA and/or FMAC loans should implement the following:

1. Review current budget to make sure you increase existing reserves to the 15% threshold for the 2027 fiscal year (assuming fiscal year is calendar, otherwise you may have to adjust budget sooner).
2. If not already completed, begin the process of conducting a reserve study if one has not been done in the last few years. (Note: It is likely that the proposed revision to the La. Condo Act will mandate reserve studies.)
3. Check with the Master HOA insurance agent to determine if current insurance coverage satisfies the new guidelines.
4. If unit owners are not required to have HO-6 policies or unit owner coverage, consider amending your governing documents or Rules and Regulations, if possible.

Additional Guidelines for Lenders and Developers

There are more details and guidelines for lenders and developers. See the actual published guidelines at Fannie Mae Lender letter LL-2026-03 and Freddie Mac Bulletin 2026-C.

If you have additional questions, please contact Randy Opotowsky.