Our Condo Board informed unit owners that Freddie Mac and Fannie Mae have established new insurance requirements for condo loans. Effective immediately residential condo properties must be insured for 100% of the estimated replacement cost. We have also been advised that our condo, like most condos, is insured on a shared cost basis of “80%/20%”, with the 20% being the condo association. Apparently, the Board became aware of this when an owner informed them that a sales contract had been turned down for this reason. To support the owner they increased the insurance coverage. Obviously, this is going to bump up our insurance costs. Are other associations aware of this change? What are the pros & cons for taking this action? Are there options, other than full compliance, to qualify for these loans?
