True Blue Lending · Live Training
The Condo Rules Changed.
Here is Old vs New.
Thursday, August 13, 2026 · 3:00 PM Eastern / 12:00 PM Pacific
Starting in
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While you wait
We are covering what actually changed in the Fannie Mae and Freddie Mac condo rules, side by side, old rule against new rule.
First thing we cover
Limited Review is retired. It has been mandatory since August 3, and it is already stopping files at underwriting.
The one most people miss
The reserve rules changed twice. One is live now, and a second raises the minimum allocation in January.
Number to write down
$50,000. That is the new cap on a master policy per-unit deductible, and crossing it forces your buyer into a separate policy.
Your host
Jesse Gonzalez, President of True Blue Lending. NMLS #278103. Bring a project you are worried about and I will look at it live.
Questions
Drop them in the chat any time. I will take them at the end, and I will stay on until they are answered.
Say hello in the chat: your name and the market you work
Free live training · True Blue Lending
The Condo Rules Changed.
Here is Old vs New.
Every change in this class is shown side by side, so you can see exactly what moved and what it costs you.
Jesse Gonzalez, President, True Blue Lending Corporation · NMLS #278103 · Company NMLS #2380218
Meet your presenter
Jesse Gonzalez
President and Founder, True Blue Lending Corporation. Undefeated against non-warrantable condo projects.
- I write these loans every week, agency and non-agency
- Send me a project address and I will tell you if it is financeable, usually within a day
NMLS #278103 · Company NMLS #2380218 · CA DRE #01855372 · 707-583-3666
Why this matters
A condo file that closed last year
may not close today.
Same building. Same buyer. Same loan amount. Different rulebook.
Where this comes from
Fannie Mae Lender Letter LL-2026-03
Published March 18, 2026. It rewrites project standards and property insurance requirements at the same time.
What it touches
Six project standards changes
Plus a full rewrite of the property insurance rules
Not just Fannie
Aligned with Freddie Mac
Issued in coordination with FHFA
Updates Selling Guide B4-2 and B7-3, and Servicing Guide B2.
Read this twice
Most of this is already the law of the land.
| Effective | What it changed | Status |
|---|---|---|
| July 1, 2026 | Master policy deductible cap and the new unit owners policy rules | ALREADY REQUIRED |
| Aug 3, 2026 | Limited Review retired. Enhanced reserve study rules required. | ALREADY REQUIRED |
| Jan 1, 2027 | Servicer insurance monitoring and annual borrower reminder | COMING |
| Jan 4, 2027 | Replacement reserves rise from 10% to 15% | COMING |
Several other changes took effect immediately on publication. Confirm the current Selling Guide for your specific scenario.
Change 1 · What you just lost
Limited Review is gone.
Stay at or under these and you skipped the budget, the reserve analysis, and the long questionnaire. Go above and you were in Full Review.
| Occupancy | Rest of US LTV / CLTV | Florida LTV / CLTV |
|---|---|---|
| Principal residence | 80% / 95% | 75% / 90% |
| Second home | 75% / 80% | 70% / 75% |
| Investment | 75% / 80% | 70% / 75% |
Retired August 3, 2026. Every cell above now requires Full Review, or a Waiver of Project Review
Historical Limited Review eligibility, retired for applications dated on or after August 3, 2026. Shown for context only. Confirm any live scenario against current agency and investor requirements.
Change 1 · What it costs you
What Full Review actually demands
- Full HOA questionnaire, not the short form
- Current operating budget, reviewed line by line
- Reserve adequacy analysis
- Critical repairs and deferred maintenance
- Litigation review
- Insurance meeting the new standards
The practical effect
Longer turn times, and more projects simply fail.
The questionnaire is the choke point. Management companies are slow and some charge for it. Order it the day you go under contract, not the week before closing.
Change 2 of 6 · Project review
The waiver got much wider.
Old rule
Waiver of Project Review was available in narrow circumstances only.
New rule
Expanded to new and established projects of ten units or fewer.
5 to 10 unit projects cannot be part of a master association or larger development.
Conditions
Not "Unavailable" in CPM, and meets the applicable insurance requirements
Bonus
No general liability or fidelity insurance required when the waiver applies
Effective immediately. On a Fannie-to-Fannie limited cash-out refinance there must also be no critical repairs or evacuation orders in place.
Section two
Reserves.
Two separate changes, both aimed at the same thing: projects that are quietly running out of money.
Reserves · Why they did this
Fannie said the quiet part out loud.
- 1 Projects with underfunded reserves correlate with projects needing critical repairs
- 2 Those projects lack the money to maintain the building or absorb a surprise expense
- 3 So owners get hit with special assessments or steep dues increases
- 4 Which drives mortgage default and foreclosure
That chain is the entire reason both reserve rules changed. When you are explaining this to a seller or an HOA board, lead with the chain, not the percentage.
Change 4 of 6 · Reserves
Replacement reserves: 10% becomes 15%.
Old rule
At least 10% of the annual budgeted income assessment allocated to capital expenditures and deferred maintenance.
New rule
At least 15% of the annual budgeted income assessment, under Full Review.
All other replacement reserve requirements are unchanged.
Applies to loan applications dated on or after January 4, 2027
Reserves · What 10 to 15 actually costs
What that looks like in dues.
Annual budgeted income assessment$400,000
Old minimum reserve allocation, 10%$40,000
New minimum reserve allocation, 15%$60,000
Additional funding the budget must find$20,000
Across 50 units, per unit, per monthabout $33
A project that budgets 10% next year fails Full Review in January.
If your client sits on an HOA board, this is the conversation to have during the fall budget cycle, not in January when their neighbor cannot sell.
Illustrative example for teaching purposes. Actual figures depend on the project's budget, unit count, and review type.
Change 3 of 6 · Reserves
The reserve study loophole is closed.
Old rule
A reserve study could demonstrate sufficient reserves. Studies commonly used the baseline funding method, where the reserve balance approaches zero but never goes below it.
The cheapest possible funding plan still passed.
New rule
The budget must fund the highest recommended reserve allocation in the study. Baseline funding is no longer permitted.
The study's own low-end scenario no longer counts.
Required for all loan applications dated on or after August 3, 2026
Reserves · What actually counts
What a reserve study has to contain.
Fannie Mae does not require a standard format. It requires that all six of these are addressed.
- 1 All major components and elements of the common areas expected to need repair, maintenance, or replacement
- 2 The condition and remaining useful life of each major component
- 3 An estimate of the cost of repair, replacement, restoration, or maintenance
- 4 An estimate of total annual contributions needed to defray those costs, less existing funded reserves, including inflation
- 5 An analysis of existing funded reserves
- 6 A suggested reserve funding plan
States may have their own statutes on the use and content of reserve studies. A study relied on by the lender must meet or exceed the requirements of the relevant state statute. Source: Fannie Mae Selling Guide.
Reserves · What to ask
Four questions that predict the outcome.
- 1 What percent of the annual budget is allocated to reserves? Under 10% is a red flag today, and 15% is the bar in January
- 2 Is there a current reserve study, and what is its highest recommended funding amount
- 3 Does the adopted budget actually fund that number
- 4 Any special assessment in place, recently completed, or under discussion
Four questions, one phone call to the management company, before your client writes.
Change 5 of 6 · Occupancy
Investor concentration limits are retired.
Old rule
Established projects under Full Review carried a 50% investment property concentration limit on investor loans.
New rule
That limit is retired. But presale still applies: at least 50% of units must be conveyed or under contract to principal residence or second home buyers.
Concentration is gone. Presale is not. Do not confuse them.
Change 6 of 6 · Florida
Florida new-project PERS review is retired.
Old rule
New or newly converted projects with attached units in Florida had to go through Fannie Mae's Project Eligibility Review Service.
New rule
Lender-delegated Full Review, the same as any other new attached project.
Section three
Insurance.
Half of this letter rewrites property insurance requirements: for units, for master policies, and for servicers.
Insurance · One to four units
Roofs come off replacement cost.
Old rule
Replacement cost coverage required, roofs included, plus documentation of replacement cost value.
New rule
Replacement cost basis with the exception of roofs. Roofs must be insured, but not at replacement cost. The documentation requirement is retired.
Actual cash value is acceptable for personal property and structures that are not buildings.
Effective immediately
Insurance · Master policy
Five ways to prove coverage is enough.
Old rule
A rigid replacement cost documentation standard, plus an inflation guard requirement.
New rule
Coverage must equal at least 100% of estimated replacement cost value, and you may rely on any one of five sources. Inflation guard is retired.
- 1 Guaranteed replacement cost coverage, or equivalent
- 2 Extended replacement cost coverage, or equivalent
- 3 A replacement cost value estimate from the insurer
- 4 The project's insurance risk appraisal
- 5 A statement from the insurer or another qualified professional
Insurance · The number to remember
$50,000 per unit.
$50K
Maximum allowable per-unit deductible on a master policy, across all required perils.
The trigger everyone misses
If the master policy has a per-unit deductible at all, the borrower must carry a unit owners policy.
Status
Already required
Applies to loan applications dated on or after July 1, 2026
Insurance · Unit owners policy
When your buyer needs an HO-6.
Old rule
A narrower and less specific test for when an individual policy was required and how much it had to carry.
New rule
Required if the master leaves any part of the unit interior uncovered, or if the master has a per-unit deductible. Coverage is the greater of restoring the unit to pre-loss condition, or the per-unit deductible amount.
Max HO-6 deductible
Greater of 5% of coverage, or $2,500
Loss settlement
Replacement cost basis
If the master has a per-unit deductible for a specific peril, the HO-6 must cover that peril
For agents
Pre-screen before you write the offer.
- 1 How many units? Ten or fewer may qualify for a waiver and skip most of this
- 2 What percent of the budget goes to reserves
- 3 Is there a reserve study, and does the budget fund its highest recommendation
- 4 Any special assessments, current or planned
- 5 Any critical repairs, deferred maintenance, or evacuation orders
- 6 Any active litigation
- 7 What is the master policy per-unit deductible
- 8 How fast does the management company return a questionnaire
For loan officers
Change your process, not just your knowledge.
- Order the questionnaire on day one. It is the longest pole in the tent now
- Check CPM early for an "Unavailable" status before anyone spends money
- Read the budget yourself. Find the reserve line before underwriting does
- Pull the master policy dec page up front and look at the per-unit deductible
- Set the HO-6 expectation at pre-approval, not at closing
- Stop quoting Limited Review. It does not exist
If you remember three things
The short version.
One
Limited Review is gone.
Full Review or a waiver, and it has been mandatory since August 3.
Two
Reserves are the new battleground.
Fund the study's highest recommendation, no baseline funding, and 15% starting January 2027.
Three
Check the master deductible.
$50,000 cap per unit, and any per-unit deductible triggers a required HO-6.
Where True Blue comes in
If the project fails agency,
the deal is not dead.
We place these with portfolio and non-agency lenders that write their own project rules.
What goes away
- No HOA budget review, no reserve percentage to hit
- No lengthy questionnaire. Short form, sometimes none
- Not bound by Fannie or Freddie project standards
- Litigation, investor concentration, single-entity ownership
- Non-warrantable, condotel, short-term-rental buildings
- Flexible income: bank statement, DSCR, asset depletion
We still run agency first
When the project fits, that is the cheapest money on the table.
The pre-screen tells us in about a day which door your deal goes through, before your client is emotionally committed.
The honest tradeoff
These price above agency.
Competitive within the non-agency market, but not conventional pricing. On a project that cannot go conventional, that spread is smaller than losing the sale.
Program availability, terms, and pricing vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.
Questions
Send me the project address.
I will tell you whether it is financeable before your client writes the offer. No charge, usually within a day.
Jesse Gonzalez
707-583-3666
President and Founder, True Blue Lending Corporation
Licensing
NMLS #278103
Company NMLS #2380218 · CA DRE #01855372
This presentation summarizes Fannie Mae Lender Letter LL-2026-03 (March 18, 2026) for educational purposes. It is not legal or compliance advice. Verify current requirements against the Fannie Mae Selling Guide and any investor overlays for the specific transaction.