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Here’s a glimpse of what you’ll learn:
- What the new Fannie Mae condo rules mean for buyers and sellers
- How the new condo approval process could affect financing
- Why some condos are already losing value
- The truth about HOA reserves and the new 15% requirement
- Why condo buyers may face higher mortgage costs
- Why sellers should get their condo financing approved before listing
- The key steps buyers and sellers need to take before a deal falls apart
In this episode with Fred Glick
Could new Fannie Mae condo rules make some properties harder to finance or sell?
In this episode, Fred Glick of Arrivva breaks down the major Fannie Mae condo financing changes taking effect August 3, 2026, including the increase in required reserves from 10% to 15% for condos with 10 or more units. He explains what lenders will now examine, why condo finances, insurance, litigation, and reserves can directly affect a property’s value, and what buyers and sellers should do before a deal falls apart.
Resources mentioned in this episode
Drew Hendricks (00:04.14)
Welcome to the latest episode of We Fixed Real Estate. Fred, how’s it going?
Fred Glick CADRE#01507615 (00:08.537)
Good, Drew, how you doing? Good.
Drew Hendricks (00:10.392)
Doing okay today. We we’ve got a pretty important topic coming up, especially if you are curious or want to buy a condo.
Fred Glick CADRE#01507615 (00:19.694)
Yes, this is the episode we’ll call We Fix Condos, or at least help you fix condos. So here’s what’s going on. In back in 2021, there’s this terrible collapse of a building in Florida.
Drew Hendricks (00:24.12)
Yeah.
Fred Glick CADRE#01507615 (00:37.424)
And from that, people died. I mean, it’s just terrible. So Fannie Mae turns around and says, you know what? We need to be a little tougher on condos. So they started asking, as you might have heard if you listen to this regularly, that you need a reserve study done within the last three years so you can ascertain what it is. And 10% of your budget has to be for reserves at a minimum.
So Fannyway went through this for a while, and they’ve always had these two things: full approval and light approval. And they did this because people were putting so much of it down payment that it wasn’t a big I mean it was a big deal, but it wasn’t a big, big deal. So that’s why they thought they’d try to make it easier. Well
It turns out it doesn’t matter how much you’re putting down, a crappy condominium is a crappy condominium. they ascertained that there’s about a hundred and seventy thousand condo associations in the USA that have ten or more units. And that’s one of the important things about their new rules. This is for units ten n ten units and above.
Okay, which is probably most of them. So there’s no more limited review for that, or streamlined review, as Freddie called it. So starting August 3rd, 2026, per Fannie Mae Lender Letter LL-2026-03. So I guess they don’t do a lot of lender letters, so it’s pretty important.
Drew Hendricks (01:59.897)
Yeah.
Drew Hendricks (02:19.662)
That’s the third one.
Fred Glick CADRE#01507615 (02:24.175)
And this is what they had to say. Every loan, no matter how much down payment you have. And by the way, you can actually purchase Fannie Mae financing condominiums with as little as 3% down payments, with PMI, of course. And if you get PMI private mortgage insurance, which means you’re putting less than 20% down, the PMI company also has to take a look at things, but they’ll rubber stamp it if Fannie approves it, unless there’s something very weird.
So, what they’re looking at in depth now is the association budget and the finances, the reserve, any outstanding litigation, and I’m sure that’s where they got hurt the most, no matter what your loan to value was, didn’t matter. And the master insurance policy. And insurance, as a lot of you know, has also been a really, really big problem. So
If your units, if you have two to ten units, you can qualify for what they call the expanded waiver of project review. So small condos get a little better, but let me tell you back to the 10 plus. First of all, big thing. Instead of 10% reserves, you have to have a minimum of 15% of the association’s budget assessment income.
Drew Hendricks (03:47.064)
Well.
Fred Glick CADRE#01507615 (03:49.824)
Annually, it’s gotta be 15% in reserves, no matter what. So that’s a really, really big one. they’re keeping the same criteria that they always had for in the insurance policies, the litigations case to case with every lender. If there’s 10 people suing the building, you’re not gonna have as easy an effort as if nobody’s suing. But if the association is suing, say the original developer.
That’s gonna be looked at because it’s probably for defects in the building. And if there are defects in the building, what are they and all that? So y y you basically gotta answer all this stuff. we here at Arriva, when we take a listing
We try to get all this up front because why do you want to have something go under contract? Then somebody goes to a lender, then they get the information from the condo association, and then they find out they can’t do it. I mean that’s it’s totally, totally frustrating. So Fannie Mae puts out this form one seven six, which is the condo approval questionnaire. And these are where
Drew Hendricks (04:36.942)
Mm-hmm.
Fred Glick CADRE#01507615 (05:04.867)
Obviously all the questions are asked. And just to give you an idea, you know, they ask the basic project information. They w they want to know, you know, like the tax ID of the HOA, who the management company is, and their tax ID number.
Does the project contain any of the following hotel, motel, resort, deed or resale restrictions, manufactured home, mandatory fee-based memberships, new and non-incidental income from business operations, supportive of continuing care for seniors or for residents with disabilities, whole bunch of like questions you would never even think at about.
But Fannie Mae’s gone through the process, Freddie too, that they’ve had foreclosures and they work backwards and they figure out what caused the foreclosure. So, you know, it it it’s gonna be tough. Is is everything complete in the whole thing? The conversion, if they were a conversion from let’s say it used to be an apartment.
within the past three years. They want to know a whole bunch of information about that. How many units are 60 days or more delinquent?
Drew Hendricks (06:24.254)
This is an eight page document. Does everybody that’s applying for a condo loan have to fill this out?
Fred Glick CADRE#01507615 (06:26.469)
yeah. It’s i yeah. Everybody. Ten unit and above. Is the HOA involv I’m sorry?
Drew Hendricks (06:33.41)
And who fills it out? Who fills it out? Is it the we are
Fred Glick CADRE#01507615 (06:38.303)
Usually it’s the property management company. But if it’s self managed, usually ten units and above aren’t self-managed. but you know, they’re gonna have to pull everybody together and get this done. You know, they wanna know how many units, how many sold and clothes, number of units to investors, all that kind of stuff. I’m just breezing through this, but
Drew Hendricks (07:07.15)
So a large b so a large condo probably has this and they just have it already filled out and they just send it on.
Fred Glick CADRE#01507615 (07:07.725)
So
Fred Glick CADRE#01507615 (07:12.247)
Yes, because they want the name of the preparer, title of preparer, preparer’s phone, email, company name, address, and date completed. So they want to know who did this. And they there’s a whole bunch of questions, and yes, as you said, it’s eight pages. It’s pretty comprehensive. In addition to that, there’s a list of items that they have to get, like the association budget.
And all the finance stuff, the copies of the reserve accounts, you know, information about the outstanding lit litigation. Let’s give the and they have to give up the master insurance policy. What I don’t see on here is the reserve study that they’re asking for it, which is interesting, but I’m sure that’s built into one of the questions though. Yeah.
Drew Hendricks (07:59.44)
Yeah, I see d question nine. What is the total current reserve account balance, but not the study?
Fred Glick CADRE#01507615 (08:07.893)
Yeah. So the bottom line is if you’re gonna be buying a condominium, it’s going to be more difficult to finance, especially buildings that have issues. Those buildings that have issues are going down in value. Okay? The condos basically aren’t going up anywhere because it’s just getting tougher to get a mortgage. I have a lawyer friend of mine who’s representing a seller of a condo in
Denver, I think.
Yeah, Denver. And he’s asking me, Well, you know, should we wait or I said get rid of it because the condo he told me very simply the condo is not Fannie Mae available because they have all kinds of reserve issues. There was some problem every this unit owner had to come up with a hundred grand for this problem. So it’s a probably a multi million dollar issue. And you can’t get financing. So it’s worthless. So how many you know, you went from let’s
Drew Hendricks (09:02.415)
Hmm. Well.
Fred Glick CADRE#01507615 (09:08.699)
say a hundred people looking at the property to four.
Drew Hendricks (09:11.629)
Yeah. ‘Cause what what those will be cash
Fred Glick CADRE#01507615 (09:12.163)
Because they’re the only people with cash. Or you can, as a seller, become the mortgage company. You can say, okay, in a million dollar house, put 30% down, and you then become the mortgage company for the other 70%. And maybe you have it balloon after three years. You know, there’s there’s kind of no rules there because it’s a transaction between buyer and seller. But that’s the only way to sell these units. Or there
There are lenders who don’t do Fannie Mae approvals, but you’re gonna pay off the wazoo, dude. Like three points higher than what you get on a normal mortgage, three percent, just to be able to get into these things that are gonna keep going down in value. There’s gonna be eventually the A, B, C, D, E, F ratings of condos. You know, I mean, not
Drew Hendricks (09:52.89)
wow.
Drew Hendricks (10:08.701)
yeah, like a like a bond like a bond score. Like a Moody’s bond rating.
Fred Glick CADRE#01507615 (10:12.173)
Yeah, like the TikTok that says w
You know, let’s rate cars on their ensure their usability. You know, I that’s a D tier. But yeah, you’re you’re gonna see the A tier condos. But here’s every here’s the thing that you as a consumer have to understand. Don’t look for the cheapest condo fee. Matter of fact, look at the condo that’s got the most expensive condo fee because they’re probably in super compliance and they’re not gonna have a problem. And they’re gonna have more value down the road. To buy something with a, that has a low condo fee.
Drew Hendricks (10:38.999)
Uh-huh.
Fred Glick CADRE#01507615 (10:44.759)
That’s what screwed Florida. All those condos in Florida, there’s like fifteen hundred of them at least on the Fannie Mae bad list. It’s terrible. C you know, add to the insurance problem and forget it.
Drew Hendricks (11:01.004)
What’s a typical reserve percentage? Like it’s going from ten to fifteen. Do most condos stay around ten, twelve percent? So they’re scrambling right now to get the reserves up to fifteen?
Fred Glick CADRE#01507615 (11:10.251)
I’ve seen them all over the place. I mean, it it’s okay. Let me say something, and this is important for everyone here. When you buy into a condominium, there are people who run the condo association who are residents. Nine times out of ten, these are people who’ve never had any power in their life. And this is the most power they will ever have. But the problem is.
Do they understand what they need to do to get the property Fannie Mae approved and keeping compliance? You know, they’re gonna have to raise the monthly or call for X number of dollars from each owner, and it’s unpopular. So what I say to everyone is the last thing you ever wanna do is serve on a condominium board.
You can go to the meetings and bitch and complain, but do not serve on these boards. It’s insanity. Most of these people have no clue about business. They don’t really care because they don’t want it to come out of their pocket. You know, it’s it’s I couldn’t think of a worse unpaid job.
Drew Hendricks (12:25.312)
I can yeah, I can imagine. Is there w so is there w is there’s no sort of database of showing what these condo reserves are. You’re just dealing with a case by case basically.
Fred Glick CADRE#01507615 (12:27.586)
Yeah.
Fred Glick CADRE#01507615 (12:35.223)
No, no, each condo’s does it themselves.
Drew Hendricks (12:38.956)
Mm-hmm. See it when you’re so you’re so you you get a new buyer and you’re going out and looking at condos, the first thing you’re investigating is how healthy are the reserves?
Fred Glick CADRE#01507615 (12:48.823)
Yeah, I mean is it Fannie May approvable is my question. Listing agents most of the time you you have to check on the Then I asked for the you know, they try to get a hold of the management company. It’s impossible. They don’t call people back, they don’t email for days, they take two weeks to get the paperwork that’s just sitting there in a folder and they charge you five hundred dollars. That is such a ripoff. So if you are on a condo board
Drew Hendricks (13:15.726)
Uh-huh.
Fred Glick CADRE#01507615 (13:17.589)
Or if you are a condo member, complain to your board that why should we be paying the property management company as a seller or a buyer for the documents that already exist? They’re in a dropbox somewhere. They just send it over. There’s nothing they need to physically do. That’s a that is another ripoff fee in in the real estate business. It’s disgusting. It’s stupid. And and you’re right, there should be like a database. So, you know, at least
Drew Hendricks (13:30.904)
Mm-hmm.
Fred Glick CADRE#01507615 (13:47.696)
database of the documents you put in that you’re there’s supposedly somebody who’s doing this but they’re not. It’s all over the world. It’s all messed up. Every condo does it completely different. So there’s no continuity in this. So you just gotta deal one or another.
Drew Hendricks (13:55.906)
Mm-hmm.
Drew Hendricks (14:01.676)
And the average I I know so your primary concern is that it’s Fannie May approved or Freddy Back approved, but approvable, but it’s going from ten to fifteen. That’s a fifty percent increase in the amount of reserves that they need to have. Now is anecdote and anecdotally, you got just in your inexperience with all the sales you’ve had, are these reserves typically in the ten to fifteen percent?
Fred Glick CADRE#01507615 (14:10.223)
Provable.
Fred Glick CADRE#01507615 (14:17.559)
Yep. So for a little while it’s gonna be an issue.
Drew Hendricks (14:29.568)
of the budget or are they more up like twenty five thirty?
Fred Glick CADRE#01507615 (14:30.68)
For for a good condo for a good condo, yes. There’s some there’s some even higher.
Drew Hendricks (14:37.344)
Are there like is it common to see one at twenty five percent?
Fred Glick CADRE#01507615 (14:40.813)
Yeah. Yeah. A really good building.
Drew Hendricks (14:42.402)
I guess an older condo, if you don’t use it, you fund it and it’s still a pr it’s appreciating in some ways.
Fred Glick CADRE#01507615 (14:48.567)
Right. It it’s a and what we’re talking about here is a percentage of the entire budget. Okay, so if the budget’s a million dollars, it’s gotta be a hundred and fifty thousand in reserve budgeted to collect that year.
Drew Hendricks (14:59.946)
Okay. In budget in budget from somebody that doesn’t own a condo, budget being like the cost it takes to operate or fix the condo. For me.
Fred Glick CADRE#01507615 (15:11.927)
Yeah, like here’s here’s an example. You’re in a condominium it’s a bunch of different buildings and there’s roads, there’s
the physical buildings themselves, the facade, let’s say it’s all brick, the roof. All those things come under the condos elevators, they eventually break. So that’s what the reserve study is for, to figure out in how many years do you need to come up with X number of dollars? Like twenty years from now, you’ll need three hundred thousand dollars to put on a new roof. So therefore
Drew Hendricks (15:43.896)
Mm-hmm.
Fred Glick CADRE#01507615 (15:45.774)
They take it mathematically and figure out what it what everybody should be putting in today so that they have that money twenty years from now. that’s what the reserves are. Yeah. And also you’re still paying a premium in rate for a condominium, just because. Fannie Mae, Freddie Mac, you’re always gonna be more expensive for a condo.
Drew Hendricks (15:57.07)
That’s helpful.
Drew Hendricks (16:05.08)
Just because
Drew Hendricks (16:09.998)
So your thirty year mortgage is different if it’s a single family home versus a condo?
Fred Glick CADRE#01507615 (16:15.413)
Absolutely. Absolutely. It’s crazy, but it’s risk management or something like that. So but yeah, the the bottom line is if you’re listing your condo, tell the listing agent get all this stuff in advance. And then you’ll know if it’s financiable or not. Because if it’s not financial, it’s probably not worth listing. And obviously, if you’re working with us, we get everything anyway.
Drew Hendricks (16:22.862)
Mm-hmm.
Drew Hendricks (16:40.44)
Yeah, so we
‘Cause you’re full service. And is part of the full service thing is you’ve got that in order. So if anybody asks, is this condo I’m selling have the reserves, you can just show them that information.
Fred Glick CADRE#01507615 (16:53.475)
Yeah, yeah. And I can also we’re we’re mortgage brokers, I can also pop this over to one of my lenders and say, hey, you know, it’s it’s gonna fly. So that’s another thing that that’s good. I mean, if if somebody like Chase or City is holding their own paper
Drew Hendricks (17:02.862)
Mm-hmm.
Fred Glick CADRE#01507615 (17:11.767)
And not selling it to Fannie Mae, there’s a possibility they might do something. But again, that’s on a case to case basis. And they’re usually gonna mirror Fannie and Freddie, and they’re gonna be tough. But again, you you know, we broker it to Louis Mortgage Brokerage and and knee repair shop. you’re gonna pay a high rate. Yeah, you want the condo? Yeah, you pay for the condo.
Drew Hendricks (17:37.646)
Very interesting.
Fred Glick CADRE#01507615 (17:39.011)
watching too many S Sopranos clips that come up on my TikTok feed. Yeah, I got my Polly Walnuts hair on.
Drew Hendricks (17:44.501)
that’s funny.
Drew Hendricks (17:49.711)
That’s funny. So this will be on the mortgage page for Reva. The the stuff coming out August third, which is gonna be I mean, it’s something you’re gonna wanna check out and also the form in case your condo association doesn’t have the form. But it’s nice for you to look at the form to even though you’re not gonna have to fill it out.
Fred Glick CADRE#01507615 (17:53.561)
Yeah.
Fred Glick CADRE#01507615 (18:06.517)
Yeah, some no, it’s weird. Some lenders will want their own form. It’s the same exact questions. It just has their logo at the top. It’s stupid. But the worst case is you might have to redo it onto their form. Big deal. But get it done, get it ready, have it disclosed to everybody up front so everybody knows about it. It’s the easiest way to do this so you don’t have people upset later down the road. It’s like fully underwritten pre-approval, getting the insurance cleared.
Getting the property cleared. So it’s the big three of the big three of the pre. Pre-approval, pre insured, pre-condo approved. There’s better words for all this, but we’ll come up with them. Fully underwritten pre approved, exactly. Exactly. I I see this the loan officers are now hiring idiotic
Drew Hendricks (18:37.806)
Mm-hmm.
Yeah.
Drew Hendricks (18:50.776)
Fully underwritten pre approved.
Fred Glick CADRE#01507615 (19:01.473)
Agencies who are selling of something for $29.95 a month. post this on LinkedIn. I see the same exact thing post 17 times from 17 agents or 15 mortgage people, the same thing. They’re all what’s the difference between pre-qual and pre-approval? Well, it doesn’t matter because you need a fully underwritten pre-approval, which is
Apply for a mortgage without a property. That’s really all it is. You’re giving all the documentation, pay stubs, W-2s, bank statements, photo ID, firstborn, I mean, you know, whatever they want. You get it approved, it’s done. You’re done. And if you’re buying in San Francisco or Cupertina or any other crazy market and you’re not fully underwritten pre-approved, don’t even bother writing a contract. They’ll just laugh.
So what you think as a buyer is just gonna be okay is not in certain markets. So why not be fully approved? Why not get it over with? I’m sure there’s procrastinators out there will have an issue with me, but say levy. Anyway, yeah, so
Drew Hendricks (20:09.806)
That’s valuable advice.
Fred Glick CADRE#01507615 (20:11.789)
Yeah, so arriva.mortgage and we’ll have all the information about this and you’ll be able to download the Fannie Mae 1075, which is that approval for your condo. Hey, and if you live in a condo, get the 1075 now. Take it over to your management company, have them fill it out. Just so you guys know what’s going on. Just without even somebody applying. Just just get it done. Yeah, maybe.
Drew Hendricks (20:36.962)
They might already have it. I mean if it’s a I can see like a yeah, if if you’re in a hundred unit condo they probably have it ’cause ha units are getting for sale all the time. Really. I can see like a twelve unit one where everyone’s lived there for ten years and nothing’s come up to market, maybe it’s
Fred Glick CADRE#01507615 (20:45.281)
Y you’d be surprised. You never know.
Fred Glick CADRE#01507615 (20:56.929)
Again, they’re all gonna be different.
Drew Hendricks (20:58.702)
It’s on it’s up to you. Get the definitely get the that duck in a row before you list your condo.
Fred Glick CADRE#01507615 (21:04.543)
Yep. Condomania.
Drew Hendricks (21:09.346)
this has been very very interesting episode for We Fix Real Estate if you are involved in the condo space.
Drew Hendricks (21:18.7)
That’s what we got today.
Fred Glick CADRE#01507615 (21:21.033)
And that’s all there is.
Drew Hendricks (21:23.298)
There might be more but we forgot. So tune in next week and we’ll remember.
Fred Glick CADRE#01507615 (21:26.487)
Yeah, we’ll figure out. no, we got a special guest I think next week, hopefully. Yeah, assuming he can make it and we haven’t hundred percent confirmed, but we got somebody who can tell you how to appeal your real estate taxes. It’s awesome. Awesome stuff. Yep.
Drew Hendricks (21:29.67)
yeah, yeah, we’re gonna hype that.
Drew Hendricks (21:40.312)
that’s gonna be great. I’m I’m excited for that one.
Well there it is. That that that’s it. I I have there I c I can’t beat this awkward close. That’s all I got today. See ya see ya everyone.
Fred Glick CADRE#01507615 (21:47.887)
All right, go go Drew, give us a good out. Take out. Come on.