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So, in our home ownership 101 segment, we are going to talk about some big changes coming down the pipe from Fannie Mae and Freddie Mac regarding condo financing. >> I hope this gets as much attention as does the commission dispute that happened last year. >> I agree. >> Because >> this is radically, I mean, radically changing the way condos are going to be sold. >> 100%. And if you own a condo, you need to be at you need to be at that board of that board of directors meeting or that HOA meeting and like asking what steps are we taking because improper steps or the lack of steps taken can affect your your valuation because you could really deplete your pool of buyers that can finance these condos. >> Can. >> Yep. >> So, one of the really big changes that Fannie Mae and Freddie Mac, now they are, you know, they're the two secondary market lenders. They're the ones that conventional they're the ones that bundle and package and sell conventional loans to the investment market. >> Correct. >> So, they're the ones that get to make the rules about lending guidelines for conventional loans. One of the big changes that they are making is that on condominiums, they are now allowing a per unit deductible on the master policy. In condo in condo world, there's a master policy that the HOA uh takes out. They usually there's different they're all kind of different one another, but they generically cover the building, the structure, all the common common elements of it. And then the individual owner has a policy in place that covers their personal items, the interior finish out, if, you know, the building burns down, it pays to replace the cabinetry inside and, you know, appliances and things like that. So, in the master policy, they are allowing up to individual deductibles up to $50,000 per unit. >> Maximum. >> Maximum. >> Right. >> So, what this does is if there is a a casualty loss, let's say that there's a tornado that comes through and takes down part of the building. >> And it has happened to one of our clients. >> has. Yep. The $50,000 deductible per unit will fall on the unit owner. >> Right. >> So, the unit owner has to come up with that first $50,000 >> Mhm. >> and that's not going to be covered under their policy, under their normal condo policy. >> And that all goes into effect July 1. >> And so, you've got to get that HO, what is it, HO6 policy or rider included in that? >> Yes. >> You know, when we were talking, you and I, when we were doing research for this to talk about, you know, we talked to Tammy Farmer, who's insurance at our company. And she said one of the things to be careful about is that if this ever were to get enacted, it that the HOA doesn't make a mistake and categorize it as an assessment. >> Mhm. >> Because if it's an assessment, then >> assessment. >> assessment, correct. >> It's a loss assessment is what they're >> Then it it could cause an insurance company to, if you have that coverage, not to be present. >> So, there is a additional policy, it's a it's just a rider on your policy that would cover that loss assessment should it fall on you as a homeowner. We had, I mean, you had that experience with with the one of the condos that you sold where there was a catastrophe to the building. You had just sold a unit to one of our friends over there and in that catastrophe, because there was a loss assessment passed down to everybody, he got a check or the HOA got a check from the insurance company, not from from >> Rather than out of his pocket. So, is a really the important thing to know is how it gets distributed to the from the HOA to the actual homeowners. It cannot be said as a special assessment. It needs to be filed as a >> Loss assessment. >> Loss assessment. >> Yeah. >> So, that's a important thing. One of the other things that's happening, are you ready to shift gears now? >> Mhm. >> Well, go ahead. So, now they're going to take and do away with the limited review. And so, the limited review was in place because it was there for underwriters if it was a community that had a high owner occupancy, um if it was someone's primary residency, that they would say, "We can just do a limited review." >> We're going to We're going to ask you 10 questions. >> 10 questions. >> And if you say yes to the 10 questions, we don't have to ask any other questions. >> We're not and we're not going to dig around. We don't need a lot of documentation. That's over. >> Yeah. >> That is 100% over. And I think this is the thing that is going to get HOAs in trouble if they get lazy >> Mhm. >> or if they're self-governed and don't understand, they don't reach out and hire a lawyer to help them situate this because there are changes in both um the reserve is now going up from 10% to 15%, which has to be shown. Um they are now going to also start asking for minutes and meetings. Because what they're doing is they're going back to see if there's any deferred maintenance that hasn't been addressed or is looming that would cause their asset, their money, their loan to be, you know, in trouble. >> And I would imagine that uh this is just a guess on my part, but because of the additional time that this is going to take for an underwriter to dig through all of that, I would imagine that the cost of borrowing with condos is going to go up a bit also. >> I think that if I 100% agree with that. And I would also say that if you're thinking of buying or selling your condo, the information like two-bedroom, two-bath. Number three, I want to know what your reserve percentage is. It needs to become that important because why waste your time? If you have a set time that you need to be in by because work starts or the kids start school, and then all of a sudden there's this like extension because they don't know and then there's a discovery and then it's not there. Now I start all the way over again. These are >> And that So these these there are three really important dates that you need to keep track of. The first is July 1st of this year and that's when the insurance uh insurance changes are going to be allowed by Fannie Mae and Freddie Mac. Your HOA may want to change their policy to the individual deductible per unit deductible. If they do, make sure you get your your own special coverage and that is by July 1st of this year. The limited review that Weston was talking about kicks in August 3rd. So any any contracts that that are effective after August 3rd or after are going to be subject to that full review. >> So if you don't close before August 3rd, like you're under contract, you're not grandfathered, are you? >> Uh so it's it depend it's based upon when the contract is it's either based upon when the contract is executed or the loan is originated. The process is started. Right. >> Okay, that makes more sense because if they already pulled the loan and they've got everything okay, then they can move forward. But if they haven't started, then they can be like, "Wait, wait, wait." >> Right. Right. >> Hold on. >> And then the last date that you need to keep in mind is the HOA reserve requirement change that Weston was talking about. That kicks in January 4th of 2027. So does give some HOAs a little breathing room to make those adjustments to have the 15% reflected in their budget. You know, they the the the thing that they have to keep in mind is that they don't have to show that money in the reserve account. They have to show it being budgeted for in the budget. So, and it doesn't matter how much they have in reserves. I learned this not long ago. It don't matter how much they have in reserves, they still have to show that percentage in the budget. Well, >> Yeah. So, have millions in the budget, but you don't have that 15%? >> Yeah. Yeah. >> And it's so funny because the term that they're going to use is non-warrantable. And to me, that has such a kind of ting to it. It does, and it just doesn't convey the meaning properly. When someone says, "Oh, I'm I I'm buying something non-warrantable." You know, when we could do the limited process, I was like, "Okay, calm down. Let's talk about what this really means." >> So, I hope you found that helpful. If you have any questions, reach out to us. We'd be happy to discuss this with you. We're going to start reaching out to our condo owners and sellers and talking about this because we think it's it's a pretty important change. >> It is. It is really is. Well, if you got topics that you'd like to hear us talk about, let us know. We'd be happy to do a little research and get back to you. And in the meantime, just remember, we want to be a real church for life.