Mortgage brokers ask FHFA for 12-month delay of Fannie, Freddie condo rules

The National Association of Mortgage Brokers (NAMB) is asking the Federal Housing Finance Agency (FHFA) to delay new Fannie Mae and Freddie Mac condominium project and property insurance standards, set to begin taking effect in August, by at least 12 months.

In a June 15 letter to FHFA Director Bill Pulte, the trade group warned that the current rollout schedule could push many projects into non-warrantable status and restrict access to conventional financing.

The rules, aimed at strengthening condo safety and financial health after high-profile structural failures, would retire Fannie Mae’s Limited Review process on Aug. 3 and raise required reserve funding levels for condominium associations from 10% to 15% on Jan. 4, 2027.

“We are not asking that these goals be abandoned,” Kimber White, president of NAMB, wrote in the letter. “We are asking that the industry be given a realistic, workable transition period so the new requirements can be absorbed without disrupting the very borrowers and communities the policy is meant to protect.”

Without that time, NAMB warned, the immediate effect of the policy “will be to reduce access to credit and depress values across the condominium market,” a result it said runs counter to the administration’s focus on affordability and supply.

Specific changes may shrink buyer pool

NAMB said eliminating Limited Review as of Aug. 3 will move “a meaningful number” of established projects into non-warrantable status, shrinking the buyer pool, raising borrowing costs and reducing lender participation.

The group also noted that many associations are not currently meeting the 10% reserve funding minimum. Jumping to 15% by early 2027 would likely force sizable dues increases or special assessments, straining owners on fixed and moderate incomes. NAMB wants the higher reserve requirement aligned with associations’ annual budget cycles.

On the move to universal Full Review, NAMB said routing every transaction through that process will significantly increase documentation — including budgets, reserve studies, delinquency data, meeting minutes and insurance — that boards, managers and lenders must produce and review, leading to longer closing timelines and higher fallout.

Another concern is the rolling, multi-date schedule. A condo that qualifies in one season could fail in the next based on reserves or documentation, creating uncertainty for buyers already under contract and for real estate professionals trying to advise clients, the group said.

NAMB asked FHFA to preserve a simplified review option for established, fundamentally sound projects; to phase in expanded documentation and Full Review requirements through clear, consolidated guidance and a single, well-publicized compliance date instead of multiple rolling deadlines; and to establish a formal process to monitor market impacts before additional tightening takes effect.