A loan application for a condo along Hermann Drive used to be mostly about the borrower. That changed on August 3, 2026. For conventional loan applications dated on or after that day, Fannie Mae no longer allows the Limited Review shortcut for established condo projects. Lenders now have to put the whole building through a Full Review, unless the loan qualifies for a waiver.
The Museum District has several high-rises from the same era. For them, this means the association's budget, its reserve account and its repair history are now part of every financed sale. Two units with the same finishes and the same view can face very different paths to the closing table depending on what the building's paperwork shows.
What Ended on August 3
Fannie Mae announced the change in a March 18, 2026 lender letter in one plain sentence:
"We are retiring the Limited Review process."
The same letter tightened two other rules. For applications dated on or after August 3, 2026, a lender relying on a reserve study can't accept the baseline funding method, which lets a reserve balance approach zero without going below it. The building's budget has to include the study's highest recommended reserve amount. For applications dated on or after January 4, 2027, about twelve weeks from now, the minimum reserve allocation under Full Review rises from 10% to 15% of the association's annual budgeted assessment income.
In the same letter, Fannie Mae explained the concern. Rising premiums and limited insurance availability are straining both borrowers and associations, and thin reserves can lead to unexpected special assessments or higher dues.
Under a Full Review, the lender examines several things about the building:
- Critical repairs. If a lender can't determine that a project is free of critical repairs, loans on its units aren't eligible for sale to Fannie Mae.
- Inspection history. Lenders review structural or mechanical inspection reports completed in the past three years. A building that never had an inspection isn't automatically ineligible, but the lender then has to establish its condition from other documents, such as HOA minutes, financials and engineer reports.
- Failed mandatory inspections. These count as an eligibility failure, and the project stays ineligible until the repairs are finished.
- Reserves versus assessments. A special assessment can't take the place of the budgeted reserve allocation. An assessment or association loan can pay for repairs, but repairs tied to safety, soundness, structural integrity or habitability have to be completed.
Freddie Mac's project review runs on similar lines. It looks at marketability, project condition, financial viability and insurance adequacy. Its definition of critical repairs includes failed mandatory inspections and certain unfunded repairs over $10,000 per unit due within 12 months. Freddie Mac also says that if a lender can't get the inspection reports or other information needed to judge a project's condition, mortgages on its units can become ineligible for delivery.
Why the Waiver Doesn't Reach Hermann Drive
Fannie Mae still offers a Waiver of Project Review, but it covers specific categories:
- detached condo units
- projects with two to four units
- projects with five to ten units that aren't part of a larger development
- most PUDs
- certain refinances, including Fannie Mae-to-Fannie Mae limited cash-out refinances up to 80% LTV and high-LTV refinances
None of these describes a buyer taking out a purchase loan on an attached unit in a tower with a hundred or more units. Here are the condo towers around Hermann Park and the museums:
| Building | Address | Year built | Stories | Units |
|---|---|---|---|---|
| 1400 Hermann | 1400 Hermann Dr | 1957 | 17 | 108 |
| 5000 Montrose @ The Museum | 5000 Montrose Blvd | 1982 | 22 | 122 |
| The Parklane | 1701 Hermann Dr | 1983 | 35 | 209 |
| Warwick Towers | 1111 Hermann Dr | 1983 | 30 | 118 |
| The Spires | 2001 Holcombe Blvd | 1983 | 40 | 230 |
| The Mosaic on Hermann Park | 5925 Almeda Rd | 2006 | 30 | 394 |
Four of the six were finished between 1982 and 1983, and 1400 Hermann goes back to 1957. The Parklane also has a second history. Tema Development began converting it from apartments to condos in 2020, as the Houston Business Journal reported.
None of this says anything about the condition or finances of any of these buildings. Our research found no recent public reporting on assessments, insurance disputes or structural repairs at any of them. Every buyer here who uses a conventional purchase loan now depends on the building passing a full project review, so the building's records belong in the pricing conversation from the first showing.
The Resale Certificate Shows the Same File Early
Texas already gives buyers much of the information a lender will review. When a non-declarant owner sells, Texas Property Code §82.157 requires the seller to provide the declaration, bylaws, rules and an association-issued resale certificate. The certificate can be no more than three months old when delivered. The Texas Real Estate Commission's Form 32-5 is the standard version. Its required attachments are the operating budget, an insurance summary and the balance sheet.
Most certificate items line up with a question in the lender's review:
| Item on the resale certificate | What a Full Review is checking |
|---|---|
| Capital reserves and any project-designated portion | Whether reserves meet the 10% minimum now and 15% from January 4, 2027 |
| Capital expenditures approved for the next 12 months | Whether major repairs are planned and funded, or would be paid for through assessments |
| Unpaid special assessments and common expenses owed by the seller | Whether an assessment is being used in place of reserves |
| Insurance coverage benefiting unit owners | Whether coverage is adequate |
| Pending suits and unpaid judgments against the association | Project financial viability |
| Governmental building-code or health violation notices | Possible critical repairs |
| Current operating budget and balance sheet | The budget the lender tests the reserve percentage against |
Insurance costs are the hardest line to forecast. The Houston Chronicle reported in September 2026 that sharply rising HOA insurance premiums, driven in part by Hurricane Harvey and Winter Storm Uri, have pushed associations to raise monthly fees. The resale certificate's insurance summary and the lender's review of insurance adequacy both put that cost on paper before closing.
The Timeline Inside a Texas Condo Contract
Under §82.157 and the current TREC Residential Condominium Contract (Resale), Form 30-18, effective July 1, 2026, the steps run in this order:
- The owner requests the certificate. After a written request, the association has until the 10th day to deliver it. Its fee is capped at $375. If the association doesn't deliver, the seller can give the buyer an affidavit, and the two parties can agree in writing to waive the certificate.
- The contract sets a delivery deadline. If the buyer hasn't received the certificate at signing, paragraph 2(C) requires the seller to deliver it within the number of days written into the blank.
- Receipt starts the buyer's clock. The contract lets the buyer terminate by written notice within 7 days after receiving the certificate, with the earnest money refunded. A missed delivery deadline doesn't by itself trigger an automatic termination under that paragraph.
- The statute adds its own window. Section 82.156 separately allows cancellation before the sixth day after receiving the certificate or signing a waiver. It requires hand delivery or certified mail, and payments made before cancellation must be refunded.
That review window is short, and it often overlaps with the lender's project questionnaire. A certificate showing approved capital expenditures without matching reserves can raise questions with the lender during that same week. Sellers who order the certificate before listing know what a buyer's lender will see before an offer arrives.
Why the Condo Market Has Split
These rules help explain a split in Houston's condo market. The Houston Chronicle reported on September 3, 2026 that ultra-luxury condos are doing unusually well. The St. Regis Residences sold out its penthouses before groundbreaking, and a Ritz-Carlton Residences penthouse in Uptown went under contract above $30 million. Meanwhile the broader condo and townhome market is weak, with high inventory and falling sales.
The Houston Association of Realtors' August 2026 report, released September 9, shows the regional townhome and condo segment:
- 405 sales, flat year over year
- a median price of $195,000, down 7.1%
- 3,504 active listings
- 8.8 months of inventory, up from 8.1 a year earlier
- pending sales down 8.0%
Those figures cover the whole region and combine townhomes with condos, so they aren't a Museum District measure. Even so, the pattern fits the mechanism. Buyers at the top of the market often finance outside the Fannie Mae and Freddie Mac rules, so a stricter building review affects them less. In the middle of the market, where buyers rely on conventional loans, the building's file is part of nearly every sale.
A Few Direct Questions
Does Full Review mean a Museum District tower will fail? No. Full Review is a more detailed check. A building with adequate reserves, current insurance and no unresolved critical repairs can pass. What changed is that a full check now applies to every conventional purchase loan in these towers.
What does the January 4, 2027 date change? For Full Review applications dated on or after that day, the minimum replacement reserve allocation rises from 10% to 15% of annual budgeted assessment income. A building whose budget meets 10% but not 15% would show the gap in any review after that date.
Can a buyer see the reserve picture before making an offer? The resale certificate lists capital reserves, approved capital expenditures and the balance sheet. A seller can provide it before the contract is signed, and the statute permits that timing.
If you own or are considering a unit in one of the Hermann Park towers, Albert Cantu can review the building's resale certificate, reserve figures and insurance summary with you before a lender does, so the timing of your sale is set by your plans and not by surprises in the project review. Schedule a private consultation.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
