Buying an Ocean City Condo This Fall: Why the Building Now Gets Underwritten Too

Fannie Mae's Limited Review process covers Ocean City condo loans with application dates before August 3, 2026. Loans with application dates on or after that date can't be sold to Fannie Mae under it. In practice, a buyer who applies for a conventional mortgage on a Coastal Highway condo this fall is asking the lender to approve two things. One is the borrower. The other is the association: its budget, its reserves, its delinquency rate and the state of its concrete. That second approval now runs through a Full Review. It also arrives just as Maryland's reserve-study law is pushing many associations toward the reserve levels Fannie Mae now checks.

What the lender now reads before it reads your file

In her August 14, 2026 Real Estate Report column in OC Today-Dispatch, Lauren Bunting wrote that the August 3 changes make Full Review the standard for condo projects that aren't review-exempt. The Limited and Streamlined paths are gone for those projects. Her column also warned that more deals may need a full review plus extra HOA paperwork. She called it a delay risk rather than a measured trend, and recommended starting financing early.

Under Fannie Mae's August 2026 condo FAQs, a Full Review looks at the building on these points:

• Reserve allocation. The association's budget has to put at least 10% toward replacement reserves. Fannie Mae calculates that as the annual reserve allocation divided by the association's annual budgeted assessment income.
• Reserve studies used as the exception. If a lender relies on a reserve study instead of the 10% test, baseline funding no longer qualifies for applications on or after August 3, 2026. When a study shows several funding approaches, the budget has to fund the highest recommendation.
• Critical repairs. Fannie Mae gives advanced deterioration of load-bearing structures and unsafe balconies as examples. A project that needs critical repairs stays ineligible until the work is finished, even if a special assessment or a loan is already paying for it.
• Project status. Units in a project marked Unavailable in Fannie Mae's Condo Project Manager aren't eligible, whatever the review type. Fannie Mae names budget reserves and HOA delinquency as examples of problems that can trigger that status.

Small buildings get one exception. Bunting noted that projects of up to 10 units may qualify as review-exempt if they have no critical repairs and aren't classified as unavailable. In a resort town with both small low-rises and large oceanfront towers, the same loan program can therefore treat two units on the same block very differently.

Why 2026 is when Ocean City associations feel it

Fannie Mae's timing lines up with a Maryland deadline that has been running since 2022.

An Ocean City building that finished its first study around the 2023 deadline would hit the end of its three-year phase-in sometime in 2026 or 2027, depending on its fiscal year. The text of HB 107 requires the study to cover structural, mechanical, electrical and plumbing components, with their remaining useful life and replacement cost. Those are the same items that feed Fannie Mae's critical-repair questions. The 2025 extension bill was withdrawn. The 2026 exemption bill's official record lists a hearing and then nothing else, so the 2022 timeline is still the one written in statute.

What catching up has looked like on an owner's bill

The law also lets boards raise assessments to cover required reserve funding even when the declaration, bylaws or another document caps assessments. That means a building's fee history may not predict its next budget.

The amounts involved have been large, though the most detailed local reporting dates from the start of the phase-in. In October 2023, OC Today reported that an unnamed 80-unit Ocean City condo faced a $2.75 million special assessment, with a three-bedroom unit owing about $58,000. The figure came from Shore Management president Cynthia Mooney. The same story cited Mann Properties CEO Igor Conev on an unnamed 28-unit building whose budget planned $157,837 in yearly reserve contributions through 2026. A reserve study at a 1990s-era building projected a special assessment of $5,000 to $10,000 per owner, after deck repairs the year before. In February 2025, OC Today-Dispatch quoted a manager whose example was a 16-unit building needing $1 million.

These figures show how big catch-up costs can get. They don't describe any building's current balance. They also explain why a 10% reserve line or a "highest recommendation" funding test now carries real weight. An association that funded the minimum for years has two choices: raise dues, or levy an assessment. Either one ends up in the buyer's closing documents.

The resale certificate is where it shows up

Maryland already makes condo sellers hand over most of what a Full Review looks at. Under Real Property § 11-135, a unit owner reselling generally has to deliver the declaration, bylaws, rules and a council certificate, among other items, no later than 15 days before closing. Read next to Fannie Mae's checks, the certificate lines up almost point for point:

The timing explains why this gets tight. The council has 20 days after a written request and payment of its fee to provide the certificate. Once the buyer has received everything required, they have 7 days to cancel in writing, for any reason and without liability, and get their deposit back. Going to closing ends that right. Buildings with fewer than seven units provide a shorter set of disclosures. Sellers must also disclose the insurance deductible they would owe under the council's property policy.

So in a large building, the documents that tell a buyer whether a loan can close are the same ones that start the buyer's cancellation window. A seller who requests the certificate when listing has it on hand when an offer comes in. A seller who waits for a contract adds up to 20 days before the buyer or the lender sees the budget at all.

A market with time for the review

The county numbers point to a market where sales take weeks. In August 2026, Maryland REALTORS reported 169 sales in Worcester County, a $465,000 median price, 778 active listings and 40 median days on market. In July 2026, the Coastal Association of REALTORS recorded a 93.9% average sold-to-original-list price ratio and 70 average days on market countywide. All of these numbers cover every residential property type, not just condos.

Bright MLS's August 2026 report for the wider Del/Mar Coastal region does break out property types. Attached homes and townhomes sold in 61 median days, compared with 43 for detached single-family homes. That covers a region larger than Ocean City, and it doesn't separate condos or explain the gap. Still, with buyers taking weeks to commit and sale prices averaging below original list, a building's paperwork can decide which of two similar units gets the financed offer.

Short answers to the questions this raises

Does this affect cash buyers? Fannie Mae's project review applies to loans sold to Fannie Mae. A cash purchase doesn't go through it, but the § 11-135 certificate and the 7-day cancellation window still apply to the resale.

If a special assessment is already paying for the repairs, is the building eligible? Not under Fannie Mae's critical-repair rule. A project stays ineligible until the repairs are finished, even when an assessment or a loan funds them.

Can owners vote to skip the reserve study? HB 1201 proposed an exemption with 80% owner approval. Maryland's legislative website lists a House hearing for that bill but no enactment, and the reserve-study requirements in HB 107 remain in the statute.

If you're listing an Ocean City condo or making an offer on one this fall, Bobbi Prescott and the team at RE/MAX Coastal can help you request the resale certificate early, go through the reserve and assessment lines with you, and plan the contract timeline around the building review. Let's Connect.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.