On March 18, the FHFA announced that Fannie Mae and Freddie Mac (i.e., the enterprises) would remove and revise certain homeowners insurance and condominium project review requirements across their respective selling and servicing guides in response to what the FHFA characterized as “skyrocketing” insurance costs. Among the most significant changes, the enterprises retired a 2024 requirement that lenders document replacement cost value to confirm property insurance coverage sufficiency for one- to four-unit properties and now allow actual cash value coverage for roofs on single-family homes and condo buildings, though replacement cost coverage remains required for the rest of the property. The enterprises also set a per-unit deductible rule establishing a flat $50,000 maximum, retired the inflation guard endorsement requirement for master property insurance policies, and introduced a new annual requirement for servicers to remind borrowers to review their coverage, among other updates.

With respect to condo project reviews, the enterprises expanded eligibility for streamlined review exemptions to include new and established projects with up to 10 units, retired the 50 percent investment property concentration limit for established projects, and eliminated the requirement that new attached-unit condo projects in Florida undergo a separate approval process. The enterprises additionally increased minimum replacement reserve requirements for condo projects from 10 percent to 15 percent of annual budgeted assessment income and enhanced reserve study requirements. Many of the insurance changes took effect immediately, while the project review and reserve changes carry phased effective dates through early 2027.