Upcoming changes coming in real estate in the Lakes Region

Fannie Mae and Freddie Mac are changing two parts of the home-buying process at once. One is how appraisals are written. The other is how condo buildings qualify for conventional loans. Neither change what a house is worth. Both change the paperwork around it.

The new appraisal report

Starting Nov. 2, most conventional home loans will use a redesigned appraisal report. Fannie Mae and Freddie Mac, which buy the majority of U.S. mortgages, will no longer accept the familiar forms that have been in use since the mid-2000s. In their place is one flexible report, built on a data standard called UAD 3.6.

The change does not create a new formula for what a house is worth. Appraisers still compare recent sales, still look at condition, and still write an opinion of value. What changes is how much of that work is written in fixed fields instead of a narrative, and how much detail the report is expected to carry.

Cash sales are outside the rule. So are many loans a bank keeps on its own books, and commercial deals. FHA is moving toward the same report but has not set a required date. The VA and USDA have not published final timelines. For a typical purchase with a conventional mortgage, the new report is the one that will matter.

The old stack of forms becomes a single report that expands or contracts based on the property. Interior and exterior condition are rated separately. Each kitchen and bathroom can get its own note on updates and condition. Photos are placed through the report. Accessory apartments, outbuildings, and site features have their own sections.

The deadline is the date the report is first sent to the agencies’ portal, not the contract date or the closing date. An appraisal ordered in mid-October can still land on the wrong side of Nov. 2. Reports already accepted in the old format can be revised for a period after that. Some lenders may get a temporary exception into 2027. Most files will not.

The practical costs are mostly about time and preparation. Industry surveys this year found most appraisers expect the first reports to take longer, and a majority expect to charge more, at least while they learn the software. Inspections may run longer because there is more to record. 

Unpermitted work is handled much as before. Appraisers are not code officers and do not typically report a homeowner to the town. They compare what they see with tax records and, when something does not match, they say so. Extra space that is not in the public record may be counted separately or given less weight. A finished basement is the common local example. It can still add value. It does not make the house larger on the appraisal the way a permitted addition above grade would.

A listing often quotes one living-area number. Tax cards and seller memory do the same. The new appraisal report does not. It splits the house into finished space above ground and finished space below ground, and it can further separate unfinished space and rooms that do not meet the national measuring standard, including low ceilings. A walkout basement that feels like part of the house is still reported as below-grade space. An attic or cape upper floor may not all count if the ceiling is too low.

None of that means the lower level is worthless. It means the appraisal will not fold it into the main square-footage line the way a brochure sometimes does. A house advertised as 2,400 square feet may appraise as 1,600 above grade plus 800 finished below grade. Both descriptions can be accurate. They are not the same number. Buyers who shopped the larger figure, then see the smaller one on the report, often think the house shrank. It did not. The report simply stopped combining two kinds of space.

Sellers and listing agents already have a place to prevent that confusion. The local listing service asks for above-grade finished area and below-grade finished area separately, then adds them into a total. Putting the basement in the above-grade field, or copying a tax-card total into one box, is what creates the mismatch later. The cleanest consumer-facing description is the split itself: how much living space is upstairs or at grade, and how much is finished below.

Counts of appraisers doing mortgage work have fallen over the past decade, and surveys put a large share of active appraisers over 60 years of age. Some say they will retire or drop bank work rather than retool. Others expect fewer revision requests once underwriters can read structured data instead of long addenda. 

If more appraisers step back while each file takes longer, the consumer effect is a tighter calendar. That shows up as a longer wait, a higher fee, or both. It does not, by itself, reset local prices.

Buyers and sellers closing near the switch should ask the lender: Will this appraisal be submitted in the new format? Has the appraiser already produced one? What happens if the number comes in below the contract price? How does a reconsideration of value work?

The condo financing rules

Separate from the appraisal change, Fannie and Freddie are also tightening the standards for the buildings themselves. These rules affect whether a condo unit can get conventional financing at all, regardless of what the appraisal says.

As of Aug. 3, the limited review is gone. For years, many condo loans qualified for a fast-track check of the association’s finances. Industry estimates put that at 60-80% of condo originations. Now every project goes through a full review of the budget, reserves, delinquencies, insurance, and litigation — unless the building has 10 or fewer units, which can qualify for a waiver. 

Beginning Jan. 4, 2027, the required reserve allocation rises from 10% to 15% of annual budgeted assessment income. A reserve study can substitute, but only if it is less than 3 years old and the budget funds the study’s highest recommended level. Baseline funding, where the balance drifts toward zero, is no longer accepted.

As of July 1, the master insurance deductible is capped at $50,000 per unit. The old 50% cap on investor-owned units is also retired, which helps buildings with higher investor concentration.

The mortgage industry has pushed back. The National Association of Mortgage Brokers asked federal regulators for a 12-month delay, warning that the rollout could push more buildings into non-warrantable status, shrink the buyer pool, and force dues increases or special assessments. A well-run association with solid reserves and no major deferred maintenance should still be fine. The transition will be uneven.

For a condo purchase, ask the lender whether the association meets the new reserve and insurance standards, and whether the project has already gone through a full review.

Lakes Region notes

National rules land differently on a seasonal, rural market.

Comparable sales are thinner outside the bigger towns. A camp, an island property, or a house with private water access already takes more explanation. The new report asks for that detail in set fields, including water frontage and access where it applies. That can make a complicated property easier to defend. It can also mean a longer inspection and a longer report.

Older housing stock and owner-finished space are common around the lakes. Converted camps, four-season additions, basement bedrooms, and cape-style upper floors are exactly the spaces the new square-footage split will isolate. Septic, shoreland, and dock questions are local issues the form will not decide, but they are easier for an underwriter to ask about once the report has a specific place to record site features.

The appraiser pool serving Belknap, Carroll, and Grafton counties is small. 

The condo rules hit the Lakes Region harder than most of the country. The region has hundreds of community associations, many of them seasonal communities around Winnipesaukee, Winnisquam, and Opechee. Freeze-thaw cycles, seasonal closure costs, and part-time occupancy make capital planning harder, and New Hampshire law sets no reserve minimum — a thin reserve is legal as long as it is disclosed. The new 15% floor is a federal financing standard, not a state mandate, but boards budgeting this fall are writing that line item now.

The region’s condo market is already under pressure. Sales volume fell in the first half of 2026 while median prices rose and days on market stretched. A tighter financing screen on top of that could slow things further, especially for older wood-frame resort buildings.

The useful bottom line is narrow. The opinion of value is still an appraiser’s opinion. The form around it is new. Through the end of the year, the risk to a Lakes Region sale is a slower appraisal, or a square-footage number that looks smaller than the listing because the basement was pulled out of the main total. For condos, the risk is a building that no longer qualifies for conventional financing — and that is a question for the association’s budget, not the buyer’s credit score.

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This article was written by Randy Miller, a Realtor at Roche Realty Group in Meredith, and can be reached at 603-279-7046. Data was compiled from PrimeMLS and is subject to change. Visit rocherealty.com to learn more about the Lakes Region and its real estate market.