It's disconcerting to keep hearing--especially from bankers, agents, accountants, & others who know better--that the reserve fund requirement is new.

The link below leads to Fannie Mae's "Selling Guide" from 2009 [the earliest version available online]; it's 1,200 pages of rules governing their loans. Jump to the middle of p. 563, & you'll find the "10% reserves" rule.

https://www.efanniemae.com/sf/guides/ssg/sg/pdf/sg1009.pdf

Consult the current Fannie Mae Selling Guide & you'll find the wording UNCHANGED. This is NOT a new rule.

Lenders that just decided to enforce this rule last year may find it easy & convenient to blame Fannie Mae now...but that's not accurate.

However, there's little debate as to whether the rule is dumb. It states that the association a] must have a budget line item for reserve funds contribution, & b] that it be at least 10% of total budgeted expenses. Yet:

1--There is NO requirement that these funds actually be deposited in reserves.

2--Fannie Mae does NOT care how much money is actually in reserve accounts, now or historically. Your reserves could have $10 or $10,000,000; it's not a factor.

Absurd? Yes...but that's the rule, & exceptions are rare.

The good news is that any banker can tell you up front--before you submit an app or pay a fee--if your building qualifies.

The only time borrowers need not be concerned with this rule is when lenders--typically local &/or small--plan to hold the mortgage in their own portfolio. If they're not reselling, they don't care about Fannie/Freddie rules.