Condo Financing

Fannie Mae's Lender Letter LL-2026-03 contains two provisions that, if implemented on their current timeline, will shut first-time buyers out of the condominium market -- the last affordable homeownership entry point in most American metros.

NAMB supports the market-expanding provisions of LL-2026-03 and urges their prompt implementation. But we are calling for an immediate pause on two specific changes: the retirement of the Limited Review process for established condominium projects (effective August 3, 2026) and the increase of the minimum HOA reserve funding requirement from 10% to 15% of the annual budget (effective January 4, 2027).

FHFA claims fewer than 10,000 associations would struggle with the new threshold and that monthly dues increases would range from $15 to $30 per unit. Independent, verifiable data tells a different story. Analysis of more than 100,000 reserve studies shows that 62-74% of associations are already underfunded. Real-world compliance costs documented in active markets range from $42 to $750 per unit per month -- with individual special assessments reaching $1.35 million per unit in the most severe cases.

Florida

Florida is home to approximately one-fifth of all condominium units in the United States -- and it is the only large state that has already implemented mandatory reserve requirements, giving us a documented record of what rapid reserve compliance actually costs. Association Reserves data shows Florida has 50% more weakly funded associations than any other state. Condo prices are already down 10.8%, 40% of owners have faced special assessments in the past three years, and more than 1,400 associations are already on Fannie Mae's unavailable project list. Florida's state law and LL-2026-03 are directly incompatible in several key areas -- including a SIRS compliance deadline that leaves zero transition time before the January 4, 2027 reserve threshold takes effect.

Nevada

Nevada leads the nation with 65%+ of all residential listings located within HOA communities -- making the stakes here unusually high. Nevada's own Commission for Common-Interest Communities has publicly stated that associations are not properly funding reserves, yet the state operates on a five-year study cycle versus Fannie Mae's three-year lookback requirement, creating built-in non-warrantability for fully state-law-compliant associations. Condo inventory has surged 77% and sales are down 15.4% year over year, with documented associations funded as low as 42%.

Colorado

Colorado only implemented its reserve study mandate in January 2025 -- less than 18 months before LL-2026-03's effective dates. Many associations are executing their first professional reserve study right now, in the same compliance window the federal requirement creates. Insurance premiums doubled between June 2022 and June 2023, with individual spikes documented as high as 572% in a single year. Governor Polis has already issued a formal Roadmap to Reduce Homeowners Insurance in response to the crisis. Condo prices are projected to fall 10-15%, and many governing documents contain assessment increase caps of just 2-5%.

California

California's 51,250+ community associations face a three-way standards conflict: state law caps regular assessment increases at 20% without a member vote and special assessments at 5% -- limits that make rapid reserve compliance legally impossible for many underfunded associations without owner approval they may not be able to obtain. Meanwhile, a 2021 reserve study analysis found that 99.85% of California condo associations already needed more than 10% of budget for reserves, meaning FHFA's proposed floor doesn't solve the problem -- it barely describes it. Add a wildfire-driven insurance crisis affecting 90%+ of associations and simultaneous SB 326 balcony inspection obligations, and the administrative capacity simply isn't there.

New York

New York has no statewide reserve study mandate and no minimum funding requirement -- and co-op governing documents require shareholder votes for major capital expenditures, creating a governance layer that cannot move on FHFA's timeline. Median HOA fees already exceed $500 per month, among the nation's highest. Local Law 97 carbon compliance is simultaneously competing for the same dollars and governance bandwidth, with potential fines of $268 per ton of excess emissions. A documented special assessment in a 37-year-old, 100-unit-equivalent building reached $77,000 per unit.

Ohio

Ohio law expressly permits condominium associations to vote annually to waive reserve requirements entirely -- a legal mechanism that has produced a documented history of chronic underfunding. Amending governing documents to override this requires a 75% supermajority under ORC 5312.05, a threshold that cannot be reached within the compliance window for most communities. There is no state reserve study mandate, no minimum funding level, and an appellate court conflict over what "adequate" even means. Documented cases include a $27,000 roofing special assessment imposed five months after purchase on a $170,000 condo unit.

South Carolina

South Carolina has no reserve study mandate, no minimum funding requirement, and governing documents that require only 48 hours notice for budget meetings -- a framework that creates virtually no foundation for rapid GSE compliance. The state's 200+ coastal high-rises, many over 30 years old, represent some of the most structurally at-risk and financially underprepared inventory in the country. The Dockside Condominiums in Charleston were evacuated in February 2025 with an estimated $151 million in required repairs -- approximately $1.35 million per unit. Seascape Villas on Isle of Palms has documented special assessments exceeding $300,000 per unit. South Carolina's own pending legislation proposes a 10-year phase-in -- nine times longer than FHFA's current window.

Texas

Texas has no reserve study mandate, no minimum funding requirement, and no existing compliance infrastructure -- meaning approximately 23,000 associations would be entering the professional reserve services market for the first time, simultaneously, competing for a finite supply of qualified specialists. With a single annual budget cycle remaining before the January 4, 2027 deadline, most Texas associations cannot realistically complete the required sequence -- commission a study, receive results, revise the budget, notify members, hold required votes -- in time through no fault of their own. There is no state framework and no statutory workaround.

Utah

Utah requires reserve studies on a five to six year cycle -- but Fannie Mae's lookback requirement is three years, meaning fully state-law-compliant associations will be structurally non-warrantable under LL-2026-03 through no deficiency of their own. Condo prices in Salt Lake City are already down 4.2% and sales are down 22.4% year over year. With 80% of new construction in Utah governed by HOAs and a state initiative targeting 35,000 starter condos by 2028, the timing of this federal requirement directly conflicts with Utah's own housing affordability strategy.

About NAMB

The National Association of Mortgage Brokers (NAMB) is dedicated to supporting mortgage professionals nationwide through education, advocacy, and resources that drive success.

Learn more about NAMB: https://www.namb.org

Become a Member: https://secure.namb.org/forms/membership

Install the NAMB App: https://www.namb.org/resources#app

Join the NAMB Hive Now Facebook Group: https://www.facebook.com/groups/nambhivenow

Engage with The NAMB Hive Community: https://www.skool.com/nambhive/about

Listen Now: https://www.nambpodcast.com