source:
  type: guide
  id: fhlmc-5701.5
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 5701.5 — Established
    Condominium Projects
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 5701.5 — Established
    Condominium Projects.
  coverage_tier: operative
obligations:
- id: fhlmc-5701.5-full
  canonical_id: fhlmc-5701.5-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 5701.5 — Established
    Condominium Projects
  type: do
  tags:
  - regulator-direct
  - fhlmc
  - freddie-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Freddie Mac Single-Family Seller/Servicer Guide Section 5701.5 — Established
      Condominium Projects
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/ci-guide
    snapshot_id: 5869ee9e606cd4ae
    fetched_at: '2026-05-23T00:27:40Z'
    content_hash: sha256:9a1b23e5024bb369e7a59d36b3702383c11ace68b5d209fdef791bc8f955c637
    paragraph_quote: '5701.5: Established Condominium Projects (05/06/26) This section
      contains: ■ Project completion requirements for Established Condominium Projects
      ■ Project budget requirements for Established Condominium Projects ■ Delinquent
      assessments for Established Condominium Projects ■ Requirements when a Seller
      relies on a project reserve study for Established Condominium Projects ■ Requirements
      when an Established Condominium Project contains Manufactured Homes To be eligible
      for the Established Condominium Projects review type, the Condominium Project
      must meet the definition of an Established Condominium Project. If the Condominium
      Unit Mortgages or the Condominium Projects do not comply with the eligibility
      requirements for (i) Condominium Projects with a Project Certified status Project
      Assessment Request (PAR) finding (see Section 5701.10) or (ii) streamlined reviews
      (see Section 5701.4), the Mortgages must comply with all of the following eligibility
      requirements in addition to the project review and eligibility requirements
      in Section 5701.2. (a) Project completion requirements for Established Condominium
      Projects All units, Common Elements and Amenities must be complete. Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5701 As of 05/06/26 Page 5701-25
      (b) Project budget requirements for Established Condominium Projects The project’s
      budget for the current fiscal year must comply with the following: 1. Be consistent
      with the nature of the project 2. Appropriate assessments must be established
      to manage the project 3. There must be appropriate allocations for line items
      pertinent to the type and status of the Condominium Project 4. There must be
      adequate funding for insurance deductible amounts 5. At least 10% of the budget
      must provide funding for replacement reserves for capital expenditures and deferred
      maintenance based on the project’s age, estimated remaining life and replacement
      cost of major Common Elements Calculation of replacement reserve percentage
      Formula Exclusions The replacement reserve percentage is determined by dividing:
      (i) the annual budgeted replacement reserve allocation by (ii) the Homeowners
      Association’s (HOA’s) annual budgeted assessment income (including regular common
      expense fees) The calculation may exclude: i. Special assessment income ii.
      Income allocated to or in reserve accounts iii. Incidental income not relied
      upon for maintenance operations or capital improvements; and iv. Amounts collected
      from unit owners (but usually paid individually by them) for items or utilities
      such as internet access 6. A Seller may rely on a reserve study instead of the
      project budget providing a replacement reserve of at least 10%, provided the
      conditions in section (d) below are met 7. An HOA must not receive more than
      10% of its budgeted income from the rental or leasing of commercial parking
      facilities (c) Delinquent assessments for Established Condominium Projects (i)
      HOA assessments Freddie Mac Single-Family Seller/Servicer Guide Chapter 5701
      As of 05/06/26 Page 5701-26 No more than 15% of the total number of units in
      a project are 60 or more days delinquent in the payment of their HOA assessments.
      (ii) Special assessments No more than 15% of the total number of units in a
      project are 60 or more days delinquent in the payment of each special assessment.
      (d) Requirements when a Seller relies on a project reserve study for Established
      Condominium Projects The reserve study must comply with the following requirements:
      1. The reserve study generally must include: ■ An inventory of major components
      of the project; ■ Financial analysis and evaluation of current reserve fund
      adequacy; and ■ Proposed annual reserve funding plan 2. A reserve study’s financial
      analysis must validate that the project has appropriately allocated the recommended
      reserve funds to provide the Condominium Project with sufficient financial protection
      comparable to Freddie Mac’s standard budget requirements for replacement reserves
      3. The reserve study’s annual reserve funding plan, which details total costs
      identified for replacement components, must meet or exceed the study’s recommendation
      and conclusion 4. The most current reserve study (or update) must be dated within
      36 months of the Seller’s determination that a Condominium Project is eligible
      (see Section 5701.2(a)(3)) 5. The reserve study must be prepared by an independent
      expert skilled in performing such studies (such as a reserve study professional,
      a construction engineer, a certified public accountant who specializes in reserve
      studies or any professional with demonstrated experience and knowledge in completing
      reserve studies) 6. The reserve study must meet or exceed requirements set forth
      in any applicable state statutes 7. The reserve study must comment favorably
      on the project’s age, estimated remaining life, structural integrity and the
      replacement of major components If the Seller relies on a reserve study that
      meets the requirements of this section, the project’s budget must contain appropriate
      allocations to support the costs identified in the study. Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 5701 As of 05/06/26 Page 5701-27 The Seller must
      obtain and retain in the Mortgage file a copy of the reserve study. The Seller
      must also perform an analysis of the study and retain this analysis in the Mortgage
      file. (e) Requirements when an Established Condominium Project contains Manufactured
      Homes To be eligible: 1. The Mortgage must be secured by a Detached Condominium
      Unit 2. The subject Manufactured Home must not be a single-wide Manufactured
      Home 3. The subject Manufactured Home must meet the requirements in Chapter
      5703 4. Although Section 5701.3(a) states otherwise, the Condominium Project’s
      unit owners must only have an undivided ownership interest in the land on which
      the project is located 5. The Condominium Project must not have campgrounds
      or other facilities for transient or mobile units For Condominium Unit Mortgages
      secured by Condominium Units located in Condominium Projects that contain Manufactured
      Homes that do not comply with these requirements, the projects must have an
      “Approved by Fannie Mae” status designation in Fannie Mae’s Condo Project ManagerTM
      (see Section 5701.9(a) for additional information) for the Mortgages to be eligible
      for sale to Freddie Mac. Note: If the requirements for Established Condominium
      Projects in this Section 5701.5 are met, then the Seller is not required to
      comply with the requirements for any of the other project review types in Sections
      5701.4 (Streamlined reviews), 5701.6 (New Condominium Project reviews), 5701.7
      (Exempt from review) and 5701.9 (Reciprocal project reviews). 5701.5: Established
      Condominium Projects (Future effective date 08/03/26) Effective for Mortgages
      with Application Received Dates on or after August 3, 2026. This section contains:
      ■ Project completion requirements for Established Condominium Projects Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5701 As of 05/06/26 Page 5701-28
      ■ Project budget requirements for Established Condominium Projects ■ Delinquent
      assessments for Established Condominium Projects ■ Requirements when a Seller
      relies on a project reserve study for Established Condominium Projects ■ Requirements
      when an Established Condominium Project contains Manufactured Homes To be eligible
      for the Established Condominium Projects review type, the Condominium Project
      must meet the definition of an Established Condominium Project. If the Condominium
      Project does not comply with the eligibility requirements for Condominium Projects
      with a Project Certified status Project Assessment Request (PAR) finding (see
      Section 5701.10), the Mortgage must comply with all of the following eligibility
      requirements in addition to the project review and eligibility requirements
      in Section 5701.2. (a) Project completion requirements for Established Condominium
      Projects All units, Common Elements and Amenities must be complete. (b) Project
      budget requirements for Established Condominium Projects The project’s budget
      for the current fiscal year must comply with the following: 1. Be consistent
      with the nature of the project 2. Appropriate assessments must be established
      to manage the project 3. There must be appropriate allocations for line items
      pertinent to the type and status of the Condominium Project 4. There must be
      adequate funding for insurance deductible amounts 5. At least 10% of the budget
      must provide funding for replacement reserves for capital expenditures and deferred
      maintenance based on the project’s age, estimated remaining life and replacement
      cost of major Common Elements Calculation of replacement reserve percentage
      Formula Exclusions The replacement reserve percentage is determined by dividing:
      (i) the annual budgeted replacement reserve allocation by (ii) the Homeowners
      Association’s The calculation may exclude: i. Special assessment income Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5701 As of 05/06/26 Page 5701-29
      Calculation of replacement reserve percentage Formula Exclusions (HOA’s) annual
      budgeted assessment income (including regular common expense fees) ii. Income
      allocated to or in reserve accounts iii. Incidental income not relied upon for
      maintenance operations or capital improvements; and iv. Amounts collected from
      unit owners (but usually paid individually by them) for items or utilities such
      as internet access 6. A Seller may rely on a reserve study instead of the project
      budget providing a replacement reserve of at least 10%, provided the conditions
      in section (d) below are met 7. An HOA must not receive more than 10% of its
      budgeted income from the rental or leasing of commercial parking facilities
      (c) Delinquent assessments for Established Condominium Projects (i) HOA assessments
      No more than 15% of the total number of units in a project are 60 or more days
      delinquent in the payment of their HOA assessments. (ii) Special assessments
      No more than 15% of the total number of units in a project are 60 or more days
      delinquent in the payment of each special assessment. (d) Requirements when
      a Seller relies on a project reserve study for Established Condominium Projects
      The reserve study must comply with the following requirements: 1. The reserve
      study generally must include: ■ An inventory of major components of the project;
      ■ Financial analysis and evaluation of current reserve fund adequacy; and ■
      Proposed annual reserve funding plan Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5701 As of 05/06/26 Page 5701-30 2. A reserve study’s financial
      analysis must validate that the project has appropriately allocated the recommended
      reserve funds to provide the Condominium Project with sufficient financial protection
      comparable to Freddie Mac’s standard budget requirements for replacement reserves
      3. The reserve study’s annual reserve funding plan, which details total costs
      identified for replacement components, must meet or exceed the study’s recommendation
      and conclusion 4. The most current reserve study (or update) must be dated within
      36 months of the Seller’s determination that a Condominium Project is eligible
      (see Section 5701.2(a)(3)) 5. The reserve study must be prepared by an independent
      expert skilled in performing such studies (such as a reserve study professional,
      a construction engineer, a certified public accountant who specializes in reserve
      studies or any professional with demonstrated experience and knowledge in completing
      reserve studies) 6. The reserve study must meet or exceed requirements set forth
      in any applicable state statutes 7. The reserve study must comment favorably
      on the project’s age, estimated remaining life, structural integrity and the
      replacement of major components If the Seller relies on a reserve study that
      meets the requirements of this section, the project’s budget must contain the
      highest recommended reserve allocation amount in the study to support the costs
      identified in the study. Reserve studies that establish a reserve funding goal
      that allows the reserve cash balance to approach but never fall below zero during
      the cash flow projection, referred to as baseline funding method, must not be
      used to waive the 10% reserve requirement. The Seller must obtain and retain
      in the Mortgage file a copy of the reserve study. The Seller must also perform
      an analysis of the study and retain this analysis in the Mortgage file. (e)
      Requirements when an Established Condominium Project contains Manufactured Homes
      To be eligible: 1. The Mortgage must be secured by a Detached Condominium Unit
      2. The subject Manufactured Home must not be a single-wide Manufactured Home
      3. The subject Manufactured Home must meet the requirements in Chapter 5703
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5701 As of 05/06/26
      Page 5701-31 4. Although Section 5701.3(a) states otherwise, the Condominium
      Project’s unit owners must only have an undivided ownership interest in the
      land on which the project is located 5. The Condominium Project must not have
      campgrounds or other facilities for transient or mobile units For Condominium
      Unit Mortgages secured by Condominium Units located in Condominium Projects
      that contain Manufactured Homes that do not comply with these requirements,
      the projects must have an “Approved by Fannie Mae” status designation in Fannie
      Mae’s Condo Project ManagerTM (see Section 5701.9(a) for additional information)
      for the Mortgages to be eligible for sale to Freddie Mac. Note: If the requirements
      for Established Condominium Projects in this Section 5701.5 are met, then the
      Seller is not required to comply with the requirements for any of the other
      project review types in Sections 5701.6 (New Condominium Project reviews), 5701.7
      (Exempt from review) and 5701.9 (Reciprocal project reviews). 5701.5: Established
      Condominium Projects (Future effective date 01/04/27) Effective for Mortgages
      with Application Received Dates on or after January 4, 2027. This section contains:
      ■ Project completion requirements for Established Condominium Projects ■ Project
      budget requirements for Established Condominium Projects ■ Delinquent assessments
      for Established Condominium Projects ■ Requirements when a Seller relies on
      a project reserve study for Established Condominium Projects ■ Requirements
      when an Established Condominium Project contains Manufactured Homes To be eligible
      for the Established Condominium Projects review type, the Condominium Project
      must meet the definition of an Established Condominium Project. If the Condominium
      Project does not comply with the eligibility requirements for Condominium Projects
      with a Project Certified status Project Assessment Request (PAR) finding (see
      Section 5701.10), the Mortgage must comply with all of the following eligibility
      requirements in addition to the project review and eligibility requirements
      in Section 5701.2. Freddie Mac Single-Family Seller/Servicer Guide Chapter 5701
      As of 05/06/26 Page 5701-32 (a) Project completion requirements for Established
      Condominium Projects All units, Common Elements and Amenities must be complete.
      (b) Project budget requirements for Established Condominium Projects The project’s
      budget for the current fiscal year must comply with the following: 1. Be consistent
      with the nature of the project 2. Appropriate assessments must be established
      to manage the project 3. There must be appropriate allocations for line items
      pertinent to the type and status of the Condominium Project 4. There must be
      adequate funding for insurance deductible amounts 5. At least 15% of the budget
      must provide funding for replacement reserves for capital expenditures and deferred
      maintenance based on the project’s age, estimated remaining life and replacement
      cost of major Common Elements Calculation of replacement reserve percentage
      Formula Exclusions The replacement reserve percentage is determined by dividing:
      (i) the annual budgeted replacement reserve allocation by (ii) the Homeowners
      Association’s (HOA’s) annual budgeted assessment income (including regular common
      expense fees) The calculation may exclude: i. Special assessment income ii.
      Income allocated to or in reserve accounts iii. Incidental income not relied
      upon for maintenance operations or capital improvements; and iv. Amounts collected
      from unit owners (but usually paid individually by them) for items or utilities
      such as internet access 6. A Seller may rely on a reserve study instead of the
      project budget providing a replacement reserve of at least 15%, provided the
      conditions in section (d) below are met 7. An HOA must not receive more than
      10% of its budgeted income from the rental or leasing of commercial parking
      facilities Freddie Mac Single-Family Seller/Servicer Guide Chapter 5701 As of
      05/06/26 Page 5701-33 (c) Delinquent assessments for Established Condominium
      Projects (i) HOA assessments No more than 15% of the total number of units in
      a project are 60 or more days delinquent in the payment of their HOA assessments.
      (ii) Special assessments No more than 15% of the total number of units in a
      project are 60 or more days delinquent in the payment of each special assessment.
      (d) Requirements when a Seller relies on a project reserve study for Established
      Condominium Projects The reserve study must comply with the following requirements:
      1. The reserve study generally must include: ■ An inventory of major components
      of the project; ■ Financial analysis and evaluation of current reserve fund
      adequacy; and ■ Proposed annual reserve funding plan 2. A reserve study’s financial
      analysis must validate that the project has appropriately allocated the recommended
      reserve funds to provide the Condominium Project with sufficient financial protection
      comparable to Freddie Mac’s standard budget requirements for replacement reserves
      3. The reserve study’s annual reserve funding plan, which details total costs
      identified for replacement components, must meet or exceed the study’s recommendation
      and conclusion 4. The most current reserve study (or update) must be dated within
      36 months of the Seller’s determination that a Condominium Project is eligible
      (see Section 5701.2(a)(3)) 5. The reserve study must be prepared by an independent
      expert skilled in performing such studies (such as a reserve study professional,
      a construction engineer, a certified public accountant who specializes in reserve
      studies or any professional with demonstrated experience and knowledge in completing
      reserve studies) 6. The reserve study must meet or exceed requirements set forth
      in any applicable state statutes Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 5701 As of 05/06/26 Page 5701-34 7. The reserve study must comment favorably
      on the project’s age, estimated remaining life, structural integrity and the
      replacement of major components If the Seller relies on a reserve study that
      meets the requirements of this section, the project’s budget must contain the
      highest recommended reserve allocation amount in the study to support the costs
      identified in the study. Reserve studies that establish a reserve funding goal
      that allows the reserve cash balance to approach but never fall below zero during
      the cash flow projection, referred to as baseline funding method, must not be
      used to waive the 15% reserve requirement. The Seller must obtain and retain
      in the Mortgage file a copy of the reserve study. The Seller must also perform
      an analysis of the study and retain this analysis in the Mortgage file. (e)
      Requirements when an Established Condominium Project contains Manufactured Homes
      To be eligible: 1. The Mortgage must be secured by a Detached Condominium Unit
      2. The subject Manufactured Home must not be a single-wide Manufactured Home
      3. The subject Manufactured Home must meet the requirements in Chapter 5703
      4. Although Section 5701.3(a) states otherwise, the Condominium Project’s unit
      owners must only have an undivided ownership interest in the land on which the
      project is located 5. The Condominium Project must not have campgrounds or other
      facilities for transient or mobile units For Condominium Unit Mortgages secured
      by Condominium Units located in Condominium Projects that contain Manufactured
      Homes that do not comply with these requirements, the projects must have an
      “Approved by Fannie Mae” status designation in Fannie Mae’s Condo Project ManagerTM
      (see Section 5701.9(a) for additional information) for the Mortgages to be eligible
      for sale to Freddie Mac. Note: If the requirements for Established Condominium
      Projects in this Section 5701.5 are met, then the Seller is not required to
      comply with the requirements for any of the other project review types in Sections
      5701.6 (New Condominium Project reviews), 5701.7 (Exempt from review) and 5701.9
      (Reciprocal project reviews).'
  judgment: false
