THE SENATE S.C.R. NO. 186 THIRTY-THIRD LEGISLATURE, 2025 STATE OF HAWAII SENATE CONCURRENT RESOLUTION 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 SENATE S.C.R. NO. 186
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
THE SENATE
S.C.R. NO.
186
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
SENATE CONCURRENT
RESOLUTION
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.
WHEREAS, in 1961, two years after statehood, Hawaii became the first state in the nation to pass a condominium law; and WHEREAS, approximately two thousand condominium associations have been formed in the State since the 1960s, representing nearly two hundred thousand units and over three hundred fifty thousand residents; and WHEREAS, there are currently hundreds of condominium associations in the State that are facing costly repairs due to aging and deteriorating common elements and fixtures; and WHEREAS, many condominiums are no longer insurable and have been denied property insurance coverage due to increased risk; and WHEREAS, the cost of making necessary repairs and retrofits in condominium properties often requires associations to impose considerable special assessments on unit owners to fund the necessary repairs; and WHEREAS, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are large companies that guarantee most mortgages in the United States if certain property and loan requirements are met; and WHEREAS, at the direction of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac recently updated their selling and servicing guidelines to establish minimum property insurance requirements for condominium properties, pursuant to Guide Section 4703.2; and WHEREAS, according to Guide Section 4703.2, master insurance policy coverage for condominiums must include loss or damage from all perils in an amount equal to one hundred percent of the replacement cost value of the project's improvements, including common elements and residential structures, as of the current insurance policy effective date; and WHEREAS, hundreds of condominium associations in the State are not eligible for the coverage required pursuant to Guide Section 4703.2, effectively barring associations and unit owners from being able to obtain affordable mortgage financing and reducing their marketability; and WHEREAS, to meet this requirement, condominium associations are required to find additional coverage to fill the gaps in their master insurance policy coverage and obtain secondary insurance policies, which are often considerably more expensive and cause greater financial hardship on condominium associations and unit owners; and WHEREAS, repealing or decreasing the requirements in Guide Section 4703.2 will help reduce insurance costs for condominium associations and ease the financial burden on condominium unit owners; now, therefore, BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, the House of Representatives concurring, that the Federal Housing Finance Agency is urged to direct Fannie Mae and Freddie Mac to repeal Guide Section 4703.2, requiring condominium master insurance policy coverage in an amount equal to one hundred percent replacement cost value of the project's improvements, or to reduce the coverage amount to less than one hundred percent of the replacement cost value; and BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of the Federal Housing Finance Agency, President and Chief Executive Officer of the Federal National Mortgage Association, and Chief Executive Officer of the Federal Home Loan Mortgage Corporation. OFFERED BY: _____________________________ Report Title: Federal Housing Finance Agency; Property Insurance; Condominiums
WHEREAS, in 1961, two years after statehood, Hawaii became the first state in the nation to pass a condominium law; and
WHEREAS, approximately two thousand condominium associations have been formed in the State since the 1960s, representing nearly two hundred thousand units and over three hundred fifty thousand residents; and
WHEREAS, there are currently hundreds of condominium associations in the State that are facing costly repairs due to aging and deteriorating common elements and fixtures; and
WHEREAS, many condominiums are no longer insurable and have been denied property insurance coverage due to increased risk; and
WHEREAS, the cost of making necessary repairs and retrofits in condominium properties often requires associations to impose considerable special assessments on unit owners to fund the necessary repairs; and
WHEREAS, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are large companies that guarantee most mortgages in the United States if certain property and loan requirements are met; and
WHEREAS, at the direction of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac recently updated their selling and servicing guidelines to establish minimum property insurance requirements for condominium properties, pursuant to Guide Section 4703.2; and
WHEREAS, according to Guide Section 4703.2, master insurance policy coverage for condominiums must include loss or damage from all perils in an amount equal to one hundred percent of the replacement cost value of the project's improvements, including common elements and residential structures, as of the current insurance policy effective date; and
WHEREAS, hundreds of condominium associations in the State are not eligible for the coverage required pursuant to Guide Section 4703.2, effectively barring associations and unit owners from being able to obtain affordable mortgage financing and reducing their marketability; and
WHEREAS, to meet this requirement, condominium associations are required to find additional coverage to fill the gaps in their master insurance policy coverage and obtain secondary insurance policies, which are often considerably more expensive and cause greater financial hardship on condominium associations and unit owners; and
WHEREAS, repealing or decreasing the requirements in Guide Section 4703.2 will help reduce insurance costs for condominium associations and ease the financial burden on condominium unit owners; now, therefore,
BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, the House of Representatives concurring, that the Federal Housing Finance Agency is urged to direct Fannie Mae and Freddie Mac to repeal Guide Section 4703.2, requiring condominium master insurance policy coverage in an amount equal to one hundred percent replacement cost value of the project's improvements, or to reduce the coverage amount to less than one hundred percent of the replacement cost value; and
BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of the Federal Housing Finance Agency, President and Chief Executive Officer of the Federal National Mortgage Association, and Chief Executive Officer of the Federal Home Loan Mortgage Corporation.
OFFERED BY: _____________________________
OFFERED BY:
_____________________________
Report Title:
Federal Housing Finance Agency; Property Insurance; Condominiums