Fannie Mae, Freddie Mac revise condo insurance standards

"Under the updates, condo buildings can now use actual cash value (ACV) roof coverage, which pays for what the roof is currently worth, while the rest of the home retains full replacement cost value (RCV) protection. Meaning it will be rebuilt brand-new if disaster hits, the FHFA explained. The agency said the change addresses the problem of full-replacement roof coverage becoming expensive."

"We are replacing a disruptive and expensive Biden insurance mandate with commonsense policies for today's market, Bill Pulte, director of the Federal Housing Finance Agency (FHFA), said in a statement. Lower insurance costs and mortgage rates shrink the monthly payment of a new mortgage, giving new homebuyers confidence that they can afford the American dream."

"Condo buildings previously priced out of the mortgage market will now qualify again, the regulator explained, and the GSEs are also simplifying the maximum per-unit deductible rule. According to the GSEs, the updates are in response to industry feedback and evolving market conditions."

Fannie Mae and Freddie Mac announced updates to condominium project standards and property insurance requirements for one- to four-unit properties, aimed at reducing homeowner costs. The changes allow condo buildings to use actual cash value (ACV) roof coverage instead of full replacement cost value (RCV), addressing expensive roof coverage that priced some buildings out of the mortgage market. The rest of the property retains full RCV protection. The GSEs simplified maximum per-unit deductible rules and expanded waivers for project reviews. These updates respond to industry feedback and market conditions, replacing what regulators characterized as a disruptive 2024 insurance mandate with commonsense policies.

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