Fannie Mae and Freddie Mac Condo Eligibility: A Board Readiness Guide

When a buyer applies for a conventional mortgage in your building, the lender is not only underwriting the buyer. If the loan will be sold to Fannie Mae or Freddie Mac, the lender must also confirm that the project itself meets the applicable eligibility requirements. That review is driven almost entirely by information your board and management supply: budgets, reserve figures, insurance certificates, litigation status, and disclosures about deferred maintenance or structural conditions. A board that cannot answer those questions quickly and consistently can slow or derail sales in its own building.

The direct answer for boards: keep an always-current "lender packet" of financials, reserve information, insurance certificates, and a written, accurate statement of building condition and any special assessments, and assign one person to complete every questionnaire. Do not guess at answers to reach a favorable result. Requirements are set by Fannie Mae and Freddie Mac and change over time, so confirm the current standards through the agency guides linked below and with your association counsel and insurance professional before making representations.

Why Project Eligibility Matters to Your Association

Condominium values depend on financing availability. If a project is deemed ineligible, buyers are pushed toward portfolio lenders, larger down payments, or cash offers, which narrows the buyer pool. Boards feel this as slower resales, price pressure, and frustrated owners who blame the association. Treating project eligibility as an ongoing governance responsibility rather than a scramble triggered by each contract is the single biggest improvement most boards can make.

What Lenders Typically Ask the Association

Questionnaire formats vary by lender, but the subject matter is predictable. Boards should be prepared to speak to:

• Budget and reserve funding. The adopted annual budget, the portion allocated to reserves, and current reserve balances.
• Assessment delinquencies. How many units are past due and by how long, using a consistent aging methodology.
• Insurance. Property, general liability, fidelity/crime, and any required flood coverage, evidenced by current certificates.
• Litigation. Pending matters involving the association, with counsel's input on characterization.
• Building condition. Deferred maintenance, known structural or safety issues, and any components not functioning as intended.
• Special assessments. Current, recently completed, and approved-but-not-yet-billed assessments, including purpose and remaining term.
• Ownership and use profile. Commercial or non-residential square footage and single-entity ownership concentration.

Accuracy Is a Board Obligation

Questionnaire responses are representations. If your building has an open engineering report identifying a structural repair, that belongs in the answer even though it may complicate a sale. The correct fix is to address the condition and document the plan, not to soften the disclosure. A funded, board-approved repair plan with a schedule tells a far better story than a vague answer that later unravels.

Illinois Context: Disclosures Buyers Already Receive

Separately from agency requirements, the Illinois Condominium Property Act establishes owner and prospective-purchaser disclosure rights that boards must honor, including access to specified association records and statements of account. Many associations discover during a lender review that their record-keeping is not organized well enough to respond within reasonable timeframes. Because the Act, the Common Interest Community Association Act, and your declaration and bylaws each contribute different obligations, ask association counsel to confirm which disclosure rules apply to your community and what your governing documents require.

Board Readiness Checklist

1. Designate a single point of contact for all lender questionnaires and record every response you send.
2. Maintain a standing lender packet: adopted budget, most recent financial statements, reserve balance, insurance certificates, and declaration/bylaws.
3. Keep a current reserve study or professional capital plan, and record the board's funding decision in the minutes.
4. Track delinquencies monthly using one consistent aging report so answers do not change from month to month.
5. Ask counsel to maintain a short written litigation summary suitable for questionnaire use.
6. Log every engineering, life-safety, and facade report, with the board's response and repair schedule.
7. Document special assessments in writing: purpose, total amount, per-unit share, start date, and end date.
8. Confirm fidelity/crime coverage limits with your agent whenever reserve balances or annual receipts grow.
9. Re-verify current agency requirements before each cycle rather than relying on last year's memory.

How Professional Management Helps

Most eligibility problems are documentation problems. Consistent financial management, disciplined maintenance coordination records, and organized board support turn a stressful questionnaire into a routine task. Stellar works with condominium associations throughout Chicago and the North Shore to keep the underlying records lender-ready year round.

This article is educational information for association boards, not legal, financial, or insurance advice. Confirm current agency requirements with the applicable guides and consult your association counsel and insurance professional about your specific building.

Want a review of how your association would answer today's questionnaire? Schedule a consultation with our management team.