Policy changes aim to ease insurance barriers and expand financing access while increasing scrutiny on maintenance and community association finances.
FALLS CHURCH, VA, UNITED STATES, March 23, 2026 /EINPresswire.com/ — Community Associations Institute today issued guidance on significant updates from Fannie Mae and Freddie Mac that are expected to affect mortgage financing for condominium associations nationwide. More condominiums will now face detailed financial reviews to secure loans. The changes also include insurance flexibility that may help some communities regain eligibility for conventional mortgages.
The long-awaited updates announced on March 18 reflect ongoing volatility in the housing and insurance markets. CAI credits the Trump administration and FHFA Director Bill Pulte for pushing through these changes. Some changes introduce new complexities while others provide relief. CAI will continue to work with the FHFA, Fannie Mae, and Freddie Mac to provide industry-specific guidance on the practical impact of these changes to condominium projects in hopes of adjustments that provide the right balance of policy to create homeownership opportunities that are financially sustainable.
“These updates reflect the realities of today’s insurance markets,” says Dawn Bauman, CAE, chief executive officer at CAI. “Greater flexibility around insurance requirements should help restore access to financing and move more condo transactions forward. At the same time, community associations will need to carefully manage increased financial and compliance expectations.”
-Key Fannie Mae and Freddie Mac Policy Changes
• Project review updates change effective Aug. 3. The limited review process will be eliminated, shifting more transactions to full project reviews and requiring additional documentation. Projects with less than 10 units may now qualify for a waiver, giving smaller communities more flexibility.
• Investor and regional rules removed. The 50% investor concentration limit has been eliminated, and Florida-specific review requirements for new, attached condos are retired, simplifying compliance for new condominium projects in Florida.
• Stronger reserve requirements begin Jan. 4, 2027. Associations must allocate at least 15% of annual budgets to reserves and follow the highest recommended levels in reserve studies. Baseline funding methods are no longer permitted, requiring condominium projects to reassess reserve funding and develop a plan to ensure compliance by Jan. 4, 2027.
• Updated insurance standards. Replacement cost documentation, full roof coverage, inflation guard requirements, and per-unit deductible requirements have been relaxed. These are the most positive of the changes for existing condominium projects that were previously ineligible due to challenges in obtaining reasonably affordable coverage to meet previous requirements.
• Loan servicer oversight changes begin Jan. 1, 2027. Servicers must verify insurance annually, monitor coverage reductions, and remind borrowers to maintain policies, increasing ongoing compliance monitoring.
CAI encourages condominium associations, lenders, and real estate professionals to begin preparing now by updating processes to allow adequate time to request documentation from condominium associations. Each transaction in a condominium project is unique and involves unique project and unit-level information. Documentation should be requested early in the process to allow for the appropriate level of review and time by the condominium project parties, including management, lawyers, reserve study providers, consultants, and insurance professionals.
-What Condominium Associations Should Do Now
• Review reserve studies and funding plans. Convene a meeting with your community manager (CMCA, AMS, PCAM, LSM) and reserve study provider (RS) to ensure budgets and reserve funding align with new minimum requirements and follow the highest recommended levels.
• Evaluate insurance coverage. Convene a meeting with your insurance professional (CIRMS) to check master policies, deductibles, and unit-level coverage to identify compliance gaps and prepare for new requirements.
• Prepare for lender questionnaires. Anticipate more detailed documentation during unit sales and ensure records are organized and accessible. Work with your documentation provider to ensure that as much information as possible is available to populate the information in your system for lender questionnaires.
• Engage qualified professionals. Work with community managers, insurance advisors, reserve specialists, and legal counsel (CCAL) to navigate changes effectively. Always look for certified and credentialed qualified professionals.
• Plan for 2026–2027 implementation. Begin early to meet deadlines and maintain eligibility for conventional financing, support property values, and keep mortgage options accessible for buyers.
“Condominium communities remain a vital pathway to homeownership,” Bauman said. “Proactive planning by condominium associations will be key to maintaining financing access and supporting stable housing markets.”
CAI will continue to monitor implementation and provide resources to help community associations and housing stakeholders navigate these evolving requirements.
Blaine Tobin
Community Associations Institute
+1 703-970-9235
btobin@caionline.org
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