Fannie Mae issued Lender Letter LL-2026-03, updating Fannie Mae’s condominium project standards policies and property insurance requirements for 1- to 4-unit properties and condominium project developments. Per the Lender Letter, Fannie Mae:

• Expanded eligibility for a “Waiver of Project Review” to include new and established condominium projects with 10 or fewer units ((for condominium projects consisting of 5 to 10 units, lenders are not allowed to use “Waiver of Project Review” if the condominium project is part of a master association or larger development);
• Retired the requirement that new or newly converted condominium projects with attached units in Florida be submitted to Fannie Mae’s Project Eligibility Review Service (PERS);
• Retired the investment property concentration limit of 50% in established condominium projects reviewed as part of the “Full Review” option on investor loans;
• Retired the “Limited Review” process;
• Enhanced reserve study requirements related to condominium project review requirements;
• Increased replacement reserve requirements related to condominium project review requirements;
• Updated property insurance coverage sufficiency requirements (including roofs) for 1- to 4-unit properties;
• Revised the requirements related to documenting the replacement cost value to verify the master property insurance policy coverage amount for condominium project developments;
• Retired the requirement to insure roofs on a replacement cost basis for condominium project developments under a master property insurance policy;
• Retired the requirement that condominium project developments have inflation guard coverage for condominium project developments under a master property insurance policy;
• Updated requirements related to per unit deductibles for condominium project developments under a master property insurance policy;
• Replaced requirements related to when a borrower is required to obtain an individual property insurance policy for a unit in a condominium project development;
• Replaced requirements related to coverage sufficiency for individual property insurance policies for a unit in a condominium project development;
• Updated requirements related to perils and loss settlement for individual property insurance policies for a unit in a condominium project development; and
• Replaced maximum deductible requirements for individual property insurance policies for a unit in a condominium project development.

Revisions related to the retirement of the “Limited Review” process and enhanced reserve study requirements must be implemented for all loan applications dated on or after August 3, 2026 (lenders, however, may implement the retirement of the “Limited Review” process immediately). Revisions related to increased replacement reserve requirements must be complied with when utilizing the “Full Review” process for all loan applications dated on or after January 4, 2027. Revisions related to updated requirements related to per unit deductibles for condo project developments under a master property insurance policy are effective for all loans with application dates on or after July 1, 2026 (lenders, however, are encouraged to implement these changes immediately). Revisions related to when a borrower is required to obtain an individual property insurance policy for a unit in a condo project development and coverage sufficiency for an individual property insurance policy for a unit in a condo project development are effective for all loans with application dates on or after July 1, 2026 ((lenders, however, are encouraged to implement these changes immediately). All other revisions are effective March 18, 2026.

Click to view the Fannie Mae Lender Letter LL-2026-03: https://www.tenaco.com/wp-content/uploads/2026/03/Fannie-Mae-Lender-Letter-LL-2026-03-03-18-26.pdf