CAI-NJ October 2025

What New Jersey Community Associations Need to Know about Fannie Mae Resale Guidelines David L. Dockery, Esq., Becker

I n June of 2025, the Federal National Mortgage Association (“Fannie Mae”) released their latest updates with regards to underwriting guidelines for condomini um, HOA, and coop resales in a helpful FAQ format. It is estimated that approximately 70% of all community asso ciation loans are guaranteed by Fannie Mae or Freddie Mac and 60% to 70% of all community association developments are more than 30 years old. Both Freddie and Fannie do not lend money directly but are guaran

deem necessary in order to guarantee a mortgage loan. Here are some of the salient highlights and summaries from Fannie Mae’s FAQs and how these issues may interplay with New Jersey law: Reserves New Jersey’s Structural Integrity Bill (S2760/A4384) signed into law in January 2024 requires, among other things, that community associations must reserve funds in accordance with its reserve study, which now must be conducted every 5 years. As part of the lender question naire process, a copy of the reserve study is requested. Fannie Mae guidelines require that the association must have a minimum annual budgeted replacement reserve allocation of 10%. This is calculated by dividing the annual budgeted replacement reserve allocation by the association’s annual budgeted assessment income. Special assessment income cannot be used in lieu of the 10% budget reserve allocation. While as of the writing of this article, to the best of the author’s knowledge, Fannie Mae is not yet looking for reserve funding compliance under state law, it is anticipat ed this on the horizon.

tors of third-party loans and purchasers of loans in the secondary mortgage mar ket. Therefore, each mort gage lender qualifies loans under its interpretation of the Fannie Mae guidelines. While there is a myriad of guidelines that loan under writers must satisfy, due to aging community associa

“Fannie Mae continues to focus on the physical condition of buildings and the reserve funding they deem necessary in order to guarantee a mortgage loan.”

tion developments, Fannie Mae continues to focus on the physical condition of buildings and the reserve funding they

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OCTOBER 2025