Condo Reserve Study Mortgage 2026: Post-Surfside Guidelines and What MLOs Must Know

The 2021 collapse of the Champlain Towers South in Surfside, Florida forced a direct response from Fannie Mae and Freddie Mac on condo project eligibility. Both agencies updated their questionnaires and project review requirements to specifically address structural integrity, reserve fund funding levels, and deferred maintenance disclosures. MLOs handling condo transactions must understand what these updates require.

What Changed After Surfside

Fannie Mae and Freddie Mac now require disclosure of any special assessments or deferred maintenance items exceeding defined dollar thresholds. Projects where the HOA has identified significant structural, mechanical, or safety deficiencies but has not yet funded the remediation are subject to additional review. Both agencies also require information about any prior or pending engineering or structural inspection reports and their findings.

Reserve Fund Adequacy Requirements

Projects where the reserve fund is funded at less than 10% of the association's annual budget may be flagged for additional review or deemed ineligible. A well-funded reserve study that demonstrates adequate funding for anticipated capital expenditures is a positive underwriting factor. An underfunded association with known deferred maintenance represents a direct financial risk to unit owners and lenders alike.

Practical Impact on MLOs

• ✦Order the HOA questionnaire at the beginning of the transaction, not after the appraisal
• ✦Ask specifically about any recent engineering, structural, or reserve studies and their conclusions
• ✦Projects with deferred maintenance flagged in a reserve study are a red flag requiring lender review before proceeding
• ✦Fannie Mae and Freddie Mac maintain lists of temporarily ineligible projects; check these before application
• ✦Non-warrantable condo lenders may still finance units in projects with reserve issues, at higher rates