Since August 3, 2026, any conventional mortgage on a unit in an older West Palm Beach waterfront tower has required the lender to examine the whole building first. Fannie Mae retired its Limited Review process and Freddie Mac retired its Streamlined Review. Lenders now use a full project review for loan applications dated on or after that day, unless the project qualifies for a waiver. Both changes come from the Fannie Mae Lender Letter and Freddie Mac Bulletin 2026-C, each dated March 18, 2026.
Along Flagler Drive, the rule change arrived at the same time as a steady run of developer buyouts. An older unit there now has three possible buyers, and each one faces different conditions. Cash buyers close on their own terms. Mortgage buyers can close only if the building passes review. Developers are bidding on the land under the building, at prices recently near $1.4 million a unit. On older Flagler Drive stock, which of those three can close has started to matter as much as the comparable sales.
What the lender reads before it reads the borrower
Under the old Limited Review, a lender could approve a conventional loan without looking closely at the association's finances. The Miami Herald reported in April that Limited Review accounted for roughly 40% of past project reviews. Its end means more documents and formal lender questionnaires for nearly all financed condo sales.
Fannie Mae's Full Review guidance has the lender confirm eligibility from the project's own records. Its examples include:
- Budgets and financial statements
- Reserve studies
- Engineer reports
- Insurance records
- Association questionnaires
Older buildings face extra checks. The lender has to review any structural or mechanical inspection completed in the prior three years. A project that fails a required local inspection, or that cannot be shown to be free of critical repairs, is ineligible. The current budget must put at least 10% toward reserves. Alternatively, a qualifying reserve study can satisfy the rule if the budget carries the study's highest recommended allocation. For applications dated on or after January 4, 2027, the minimum rises to 15%. The Real Deal also reported that lenders can no longer accept a baseline funding method, which had historically allowed a reserve balance to approach zero.
The waiver covers far less than the old shortcut did. It reaches detached units, two-to-four-unit projects, and five-to-ten-unit projects that are not part of a larger development or master association. Every Flagler Drive building named in this post has dozens of units, so financed purchases there go through Full Review.
The same package loosened other rules
The federal update also eased several requirements, and that explains the conflicting headlines. The Herald noted that the long-standing 50% investor-concentration limit is gone and that Florida-specific requirements for new condo projects were removed. Roofs also no longer need coverage at full replacement cost. In a March 19 release, Rep. Byron Donalds called the change a win for Florida borrowers. He said Florida owners had faced 25% down payments and claimed buyers would see terms "ranging from 3% to 5%." The same release says previously eligible established projects must use Full Review once Limited Review ends on Aug. 3.
The relief and the extra scrutiny land on different buildings. New projects and investor-heavy communities gain room. An established tower with an inspection history and a thin reserve line now gets the closest look from the lender.
Where financed deals are slowing
About a month after the switch, The Real Deal reported on how financed condo deals were going in South Florida. Mortgage brokers were waiting on associations for documents. Once the documents arrived, more buildings were falling short of Fannie or Freddie thresholds, which sent buyers to non-QM lenders that typically charge higher rates. Some brokers were filing traditional and nontraditional applications side by side. Melissa Cohn of William Raveis Mortgage told the outlet:
"A lot of these buildings don't have the financial capacity to increase their reserves to 15 percent."
She added that all of this "will put a premium on the value of the buildings that are compliant."
For a seller, a building's compliance status now affects demand. A unit in a building that passes review can sell to every buyer in the market. A unit in a building that fails is limited to cash buyers and higher-cost lenders.
Cash buyers skip the review
The Herald pointed out that these standards do not apply to cash deals. In Palm Beach County, cash buyers are a large share of the condo market. In August 2026, cash accounted for 57.2% of existing condo sales countywide, according to the MIAMI REALTORS and BeachesMLS release published September 16.
The same August figures show the conditions financed buyers face. The 30-year fixed rate averaged 6.67% in August and had reached 7.17% by September 15, 2026. Countywide, condos sold for a median 93% of original list price in August, took a median 69 days to go under contract, and stood at 6.7 months of supply. The association classifies that as a balanced market. The release also counts just 21 of the 2,397 condo buildings in Miami-Dade, Broward and Palm Beach counties as approved for FHA loans.
So the cash buyer competes in a balanced market with no project-review risk. The financed buyer pays over 7% and waits on the association's paperwork. In an older waterfront tower, those two buyers face very different odds of closing on the same unit.
Developers are bidding on the land
The third buyer, a developer, makes offers for entire Flagler Drive buildings, and the prices show what the land under an aging tower is worth to them.
| Building | Units | Offer or deal | Reported status |
|---|---|---|---|
| La Fontana, 2800 N. Flagler Dr. | 140 | About $200M from Unicorp, roughly $1.4M per unit | Under contract, board approved, closing expected next year |
| Portofino South, 3800 Washington Rd. | 140 | $295M from BEKO Equities, up from $202M | Offer deadline extended to Nov. 3 |
| Regency Surf & Racquet Club, 4500 N. Flagler Dr. | 96 | $100M from Terra Group | Offer reported, no outcome reported |
| Flagler Yacht Club, 3701 S. Flagler Dr. | 39 | Undisclosed bidder | Owners weighing an offer after interest from four developers |
| Harbor Towers, 3901 S. Flagler Dr. | 61 | About $100M from Fort Partners, roughly $1.4M per unit | Final unit closings reported in February 2026 |
La Fontana was completed in 1961, and The Real Deal describes it as a co-op. In July it reported that Chuck Whittall's Unicorp was under contract with unanimous board approval and that closing could come next year. On August 26, Whittall confirmed plans to replace the building with a two-tower complex featuring an ultra-luxury hotel and a hotel-branded condominium, according to Palm Beach Post reporting republished by the Boca Raton Tribune. On the south end, Related Ross had acquired 45 of Southbridge's 63 units by February 2026, according to The Real Deal.
The Real Deal links these buyouts to two causes. Undeveloped waterfront land is scarce, and Florida's post-Surfside laws require older associations to repair their buildings and fund reserves, at costs that push some owners to sell. The same reserve and repair records that now decide mortgage eligibility also help explain why developers are making offers.
At Portofino South, buying a unit means joining a vote
Portofino South shows what an individual buyer takes on in a building with a live offer. The 12-story, 140-unit building was completed in 1971. BEKO Equities is a joint venture of Immocorp Capital founder Gilbert Benhamou and Hong Kong-based O.D. Kobo. It raised its offer to $295 million, which the Palm Beach Post described as "best and final." That works out to a little over $2 million per unit on average.
The Palm Beach Post's September 8 report said BEKO had extended its deadline to November 3. It also said the building faces ongoing maintenance assessments. A follow-up Post report added that, under Florida law, 5% of owners, or seven units, can block the bulk sale. Holdouts said there were more than 20 of them. In that account, supporters pointed to assessments and cost overruns. Opponents valued the Intracoastal views and noted that the building had passed its milestone inspection.
Anyone buying a Portofino unit before November 3 is buying a vote as well as a residence. The unit's value depends partly on an outcome that a handful of owners can decide.
Three files worth requesting on an older Flagler Drive unit
Each type of buyer depends on a different set of documents, and together they show which buyers a given building can serve.
- The lender's project review outcome. It shows whether conventional financing is available in the building at all. Under Full Review, that depends on the building's budget, reserves, inspections and insurance.
- Reserve funding against the January 4, 2027 threshold. Fannie Mae's minimum rises from 10% to 15% for applications dated on or after that date, unless the budget follows the highest recommended allocation in a qualifying reserve study.
- Board minutes and any written developer offer. Unicorp's contract at La Fontana, BEKO's offer at Portofino South and the reported offer at Flagler Yacht Club were all in front of owners before most buyers heard about them.
This is general information about how lending and association processes work. It is not legal, tax or financial advice, and readers should confirm their own situation with a qualified attorney, lender or tax professional.
Frequently Asked Questions
Does the August 3 change apply only to Florida? No. Fannie Mae defines the review by unit count, attached or detached status, project type and the transaction itself, and the cutoff depends on the loan application date. The Florida-specific changes in the same package eased requirements for new projects.
Does every building now need a brand-new inspection? Fannie Mae does not require one for every review. Lenders must review any structural or mechanical inspection completed within the prior three years. If none exists, they use other evidence, such as association minutes and financials, to judge whether critical repairs are needed.
Has Portofino South accepted the offer? The most recent reporting, from September 2026, describes owners still weighing the offer ahead of a November 3 deadline and reports no acceptance or vote. La Fontana is under contract but has not closed.
Stephanie Schwed reviews association budgets, inspection histories and buyout correspondence on older Flagler Drive buildings before an offer is written, so you know which buyers a building can support before you commit to it. Let's Connect.
