The world of housing finance is a complex web of institutions and regulations, often steering the course of homeownership from behind the scenes. At the forefront of this intricate dance are two significant players: Fannie Mae and Freddie Mac. These government-sponsored enterprises are no strangers to the housing market, collectively supporting a staggering 70% of all mortgages, as reported by the National Association of Realtors.

However, their influence extends far beyond the realm of numbers and statistics. Fannie Mae and Freddie Mac are the architects of eligibility standards that determine the mortgage lending landscape for condominiums and housing cooperatives across the nation. As of September 18, 2023, these standards have undergone crucial updates, reshaping the path to homeownership for countless communities. Following the Champlain Towers South condominium collapse in June 2021, Fannie Mae and Freddie Mac initiated the development of revised guidelines, which were recently unveiled. It is of utmost importance for condominiums and housing cooperatives to align with these standards to maintain access to Fannie Mae and Freddie Mac-eligible loans.

In this article, we delve into the transformative revisions introduced by Fannie Mae and Freddie Mac. Together, we will explore how these changes impact your community association, guiding you through the essential documentation, requirements, and strategies necessary to ensure your eligibility in this evolving housing landscape.


Community association boards and managers should be prepared for changes in lender questionnaires and requests for additional documentation, including:

  1. Insurance Policies: Comprehensive details of insurance coverage.
  2. Budgets: A transparent breakdown of your financial plans.
  3. Financial Reports: Detailed financial statements.
  4. Reserve Studies and Funding Schedules: Documentation outlining your reserve plans.
  5. Documentation Regarding Special Assessments: Information on any special assessments.
  6. Documentation About Litigation or Alternative Dispute Resolution: Details of any legal matters.
  7. Building Inspection Reports: Reports on the condition of the property.

Failure to provide this information to lenders could lead to your project being classified as ineligible, which could be detrimental to your condominium or housing cooperative association.


Moreover, based on the information your community provides, it may also be deemed ineligible if:

  1. Critical Repairs are Needed: Immediate repairs are necessary.
  2. Current Evacuation Orders Due to Unsafe Conditions: Ongoing safety concerns exist.
  3. Unfunded Repairs Totaling More than $10,000 per Unit: Insufficient funds for essential repairs.
  4. Inadequate Property Insurance Coverage: Insurance coverage falls short of requirements.
  5. Budget Deficiencies: Budget lacks necessary funding for insurance deductibles and reserves.
  6. Delinquent Owners: More than 15% of owners are over 60 days delinquent in paying their assessments.
  7. Excessive Commercial or Nonresidential Space: Commercial space accounts for over 35% of the property’s square footage.

Additionally, a reserve study and funding schedule have become integral to the eligibility criteria. Communities must maintain an inventory of major components, undergo a financial analysis to evaluate reserve fund adequacy, and propose an annual funding plan. This reserve study or update should occur every three years and be conducted by an independent expert, meeting or exceeding applicable state statutes. Furthermore, it should provide favorable comments on the project’s age, estimated remaining life, structural integrity, and the replacement of major components.

To ensure eligibility, be vigilant about building inspection reports, insurance requirements, and pending litigation matters.

At Ardent Residential, we’re committed to helping your community meet these updated standards and navigate the evolving landscape of condo and HOA management. Our team is here to assist you in ensuring the prosperity and eligibility of your project. For more information and personalized guidance, please contact us today. Your success is our mission.




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