Fannie Mae and Freddie Mac made two changes on August 3 that condominium boards should understand before a sale, refinance, or lender request turns into a fire drill.
The more important change for most boards is about reserve funding.
The other change — the retirement of faster mortgage-review options — may create more documentation requests. That is an operational issue. It matters, but it comes second.
Reserve studies often show more than one funding path.
As of August 3, baseline funding can no longer be used when a lender relies on a reserve study to confirm that a condominium community has adequate reserves for mortgage purposes.
In that situation, the association’s adopted budget must reflect the reserve study’s highest recommended annual contribution.
That does not mean every board must immediately adopt the highest number in its reserve study.
Here is how the rule works in practice.
Assume an association has:
Through January 3, 2027
The current reserve-contribution standard is 10% of the association’s annual budgeted income.
Beginning January 4, 2027
The standard rises to 15%.
That is the straightforward path.
Not automatically.
The $350,000 figure—the reserve study’s highest recommendation—becomes relevant if the association does not meet the percentage standard and a lender relies on the reserve study instead.
In this example:
The key distinction is simple:
These are mortgage-financing standards. They are not a legal mandate telling every board what it must contribute to reserves.
A board can decide that a lower contribution, a phased increase, or a future special assessment is right for its community. But it should make that choice with a clear understanding of the tradeoff.
If a community does not meet the applicable Fannie Mae or Freddie Mac standards:
In the example above, the board has three understandable choices:
None of these choices makes deferred work disappear. Lower contributions may defer the financial impact, but they do not eliminate it.
Note: This is a simplified example, not legal, lending, engineering, accounting, or reserve-specialist advice. Each community should review its own budget, reserve study, and financing questions with the professionals it retains.
Fannie Mae and Freddie Mac also retired the faster review options that had applied to many condominium mortgage applications.
Lenders have always reviewed information about the community as well as the borrower. What changed is that loans that once qualified for a lighter review may now require a fuller project file.
Boards and managers should be ready to provide, when requested:
The exact request will vary by lender and transaction. There is no need to assume every sale will become a problem. There is every reason to keep the information organized.
The faster mortgage-review change is specific to condominium loans. The reserve-study change may matter to condo and co-op boards alike.
Confirm its date, the funding recommendations it contains, and whether the adopted budget follows one of them.
Separate the budgeted replacement-reserve contribution from operating expenses, debt service, litigation costs, and special assessments.
Discuss whether maintaining broad access to conventional mortgages is a priority for the community, and make reserve-funding decisions with that consequence in view.
Keep the budget, financial statements, reserve study, insurance records, engineering or inspection reports, major-project information, and special-assessment history in one known location.
Identify who receives lender requests, gathers documents, confirms accuracy, and knows when a question belongs with counsel, an engineer, a reserve specialist, or the board.
They can tell you what they are actually beginning to request and where their underwriting questions are landing.
Condo Status Finder can show whether Fannie Mae has identified conditions in its records that may affect a condominium community’s eligibility. A “No findings” result is useful, but it is not project approval.
Using owner emails, fact sheets, flyers, and fully scripted presentations for community meetings, The Well-Run Building gives boards the materials they need to talk through structural integrity requirements, reserve funding, and mortgage eligibility rules — in plain language, one week at a time.
I am interested in learning what managers, lenders, attorneys, reserve specialists, and board members are observing and hearing.
Are the immediate questions primarily about reserve contributions, or are lenders already asking for materially different documentation?
If you think I have misrepresented anything, please let me know. I will correct it. I do not present myself as a lender, lawyer, or reserve specialist. My goal is to translate highly technical bureaucratic rules into plain language I can understand and explain to someone else. Translation requires judgment; if I misjudge something, I want to know so I don’t perpetuate unclear or inaccurate information.
Sources: Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C.
For boards facing difficult reserve, structural, or mortgage-eligibility conversations, I also created The Well-Run Building, a free 12-week communications program with owner-facing explanations, FAQs, and practical templates.
If this kind of plain-language board guidance is useful, I publish Leading Well-Run Boards, a weekly newsletter for volunteer boards and the managers who support them.
The Well-Run Building is a free 12-week communications program for condo and co-op boards navigating structural integrity, reserve funding, mortgage eligibility, and 2027 budget planning.
It does not replace legal counsel, engineering advice, reserve analysis, property-management expertise, insurance advice, or financial planning.
It helps boards turn that advice into communication owners can understand — before uncertainty becomes distrust.
The program provides a practical structure for explaining what has changed, why it matters, what the board is reviewing, what owners should expect next, what is known, what is not yet known, and when the next update will come.
Hard decisions are not made easier by pretending they are not hard.
They are made more manageable when no one has to learn about them from a rumor, a lender, or a failed sale.
Reserve funding is one part of a larger governance challenge. Structural integrity, mortgage eligibility, and the systems boards use to turn professional advice into decisions are increasingly connected.
Continue with long-form articles on reserve funding, special assessments, mortgage eligibility, and the decisions facing condominium and community association boards.
BoardOS connects the five systems every board relies on to turn professional expertise into sound decisions.
Board Consulting helps boards clarify decisions, responsibilities, priorities, and the systems needed to move difficult work forward.
