What every HOA board needs to know right now
New Fannie Mae and Freddie Mac rules are already reshaping how condos qualify for financing. Add California’s SB 1007 to the mix, and boards across Southern California are facing one of the most consequential seasons of change in decades.
▶ Watch the full webinarThe rules just changed — for real this time
We hosted this webinar because we were seeing real confusion on the ground. Board members were getting questions from homeowners about why units weren’t selling, why lenders were suddenly asking for reserve studies, and what the word “warrantable” even means. The answers all lead back to three major shifts happening at once.
On March 18, 2026, Fannie Mae issued Lender Letter LL-2026-03 and Freddie Mac released a matching bulletin — the most significant update to condo lending standards in several years. Layer California’s SB 1007 on top, and it’s a lot for any board to absorb. We broke it all down in plain language so you can walk into your next board meeting prepared.
Reserve requirements jump to 15%
Starting January 4, 2027, your HOA must fund reserves at 15% of the annual operating budget — up from 10%. Missing this threshold puts your community’s warrantable status at risk.
Full reviews replace limited reviews
As of August 3, 2026, lenders can no longer use the simplified “limited review” process. Communities either get a waiver or go through a full questionnaire — a bigger ask for boards and managers alike.
Insurance standards tightened
Master property insurance must now equal at least 100% of the estimated replacement cost value, including all common elements. Roof and interior (HO6) policies are also being scrutinized.
California SB 1007 is moving fast
Still in the legislature, but boards need to watch it closely. It would cap annual assessment increases at 8% (down from 20%), mandate fee transparency, and require disclosure of management company compensation.
What happens if your community isn’t ready
Here’s what we want every board to understand: this isn’t just a lender problem. When a community loses its warrantable status, buyers can no longer use conventional financing through Fannie Mae or Freddie Mac to purchase units. That shrinks your pool of potential buyers, puts downward pressure on property values, and can trigger a cycle that’s genuinely hard to reverse.
As of 2026, nearly 70% of residential mortgages follow Fannie Mae and Freddie Mac standards. If your community is on their “do not lend” list, you’re blocking most buyers before they even start.
The good news is that communities with strong reserve funding, up-to-date reserve studies completed within the last 36 months under the recommended funding method, and solid documentation are well-positioned. The work you put in now protects your homeowners for years to come.
What the “Fair and Affordable HOAs” Act would mean for your board
SB 1007, authored by State Senator Caroline Menjivar, is designed to increase financial transparency and limit how quickly HOA fees can rise. The bill would require boards to publish a detailed breakdown comparing budgeted versus actual spending, disclose management company fees, and cap regular assessment increases at 8% annually without a homeowner vote.
We want to be transparent: this legislation has real supporters and real critics. Some view the 8% cap as a responsible consumer protection. Others — including many HOA attorneys — warn it could leave associations unable to fund necessary repairs or reserve contributions during periods of high inflation. What’s clear is that boards should be talking to their management company and legal counsel about how to prepare either way.
Topics covered in this webinar
Keywords and topics addressed — helpful for boards researching these issues.
Watch the full webinar
We cover every detail — what’s changing, when it takes effect, and exactly what your board should be doing right now. No jargon, no fluff.
Watch now — it’s free
