Requesting The Federal Housing Finance Agency To Direct Fannie Mae And Freddie Mac To Repeal Or Reduce The Minimum Insurance Requirements In Guide Section 4703.2, Requiring Condominium Master Insurance Policy Coverage For All Perils In An Amount Equal To One Hundred Percent Of The Replacement Cost Value Of The Project's Improvements.
The resolution highlights the historical context of condominium development in Hawaii, noting that since the passage of the state's first condominium law in 1961, thousands of associations have formed. Many of these associations are now facing severe financial pressure due to the costs required to meet the high insurance standards mandated by federal guidelines. The prohibitive nature of these requirements has resulted in some properties becoming uninsurable and has necessitated special assessments that add further financial strain on condominium owners.
Senate Concurrent Resolution SCR186 requests the Federal Housing Finance Agency (FHFA) to direct Fannie Mae and Freddie Mac to repeal or reduce the stringent minimum insurance requirements for condominium master insurance policies specified in Guide Section 4703.2. According to these guidelines, current policies mandate that condominium associations possess coverage equating to one hundred percent of the replacement cost of their properties. SCR186 aims to alleviate the burdens placed on many condominium associations and their unit owners due to these insurance requirements, which have made it increasingly difficult for them to secure affordable financing.
While supporters of SCR186 argue that relaxing these insurance standards will facilitate access to better mortgage financing and reduce financial hardship, potential opposition may arise from concerns over the adequacy of insurance coverage for condominium properties. Critics might contend that reducing insurance requirements could undermine the financial protection of both homeowners and lenders, particularly in a volatile housing market. The resolution thus opens a discussion on the balance between adequate insurance coverage and the financial viability of condominium associations.