AD Mortgage is launching a new policy arm, with its first initiative aimed at upcoming US Federal Housing condo changes involving the elimination of limited reviews. 

The wholesale lender sent a letter to the FHFA explaining the importance of the limited review process in facilitating access to conventional condo financing, particularly in Florida, where condos are an important source of homeownership, AD Mortgage said in a press release Tuesday.

More than 750 Florida condo loans originated by AD Mortgage since 2021 used the limited review process, and 53% of its Florida conventional condo originations during that period relied on limited review, according to the release.

The process is set to be officially retired on Aug. 3 in favor of the full review process.

"Our objective is simple: bring practical market experience and real-world lending data into policy discussions," said Corey Chubner, senior vice president of government affairs and investor relationships at AD Mortgage, in the release. "The mortgage industry has an important responsibility to help policymakers understand how regulatory changes affect borrowers."

Other industry groups have expressed similar concerns over the changes. Dawn Bauman, CEO of the Community Associations Institute, estimated around 40% of condo loans are done through the limited review process.

"By causing all condominium loans to produce the full set of project documents, what you're effectively doing is causing a huge cohort of buyers and owners to provide them," Taylor Stork, chief operating officer at Developer's Mortgage, previously told National Mortgage News. "Those documents are not inexpensive."

But this sentiment contradicts the stance of some public officials. Rep. Byron Donalds, R-Fla., said in a press release in March that Florida condo borrowers and owners have been harshly subject to a 25% down payment, a rate significantly higher than those applied in other states under the same limited review process. 

"For the last 17 years, the Florida condo market has been singled out and subjected to overly burdensome Fannie Mae and Freddie Mac restrictions that don't apply to any other state in the country," Donalds said. "These 2008 policies are not only outdated and unfair to the Sunshine State, but they are an unnecessary barrier to condo financing and have limited the available housing options for Floridians."

AD Mortgage's letter also addressed Fannie Mae's increase of the mandatory replacement reserve allocation from a minimum of 10% to 15% of a homeowners association's annual budgeted income, which will take effect on Jan. 4, 2027. About 30% of manually reviewed condo projects had reserve funding below the new 15% threshold and will be affected, according to the letter.

The lender urged the FHFA to closely monitor implementation of the updated condo eligibility standards and remain open to future refinements.

AD Mortgage's Public Policy Initiative will focus on issues including housing affordability, regulatory modernization, credit access, government lending programs, capital markets and state licensing, the release said. 

"As AD Mortgage continues to grow nationally, we believe we have both the opportunity and the responsibility to be an active participant in public policy discussions that affect our customers, broker partners, and the housing finance system," CEO Max Slyusarchuk said.