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HCR 172

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.

2025 Regular Session Introduced by Diamond Garcia

Hawaii urges FHFA to repeal or reduce the 100% replacement-cost master insurance requirement for condo associations with Fannie Mae and Freddie Mac.

Referred to CPC, FIN, referral sheet 22
#condominiums #federalhousingfinanceagency #propertyinsurance
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Bill Summary · HCR 172

Summary — HCR 172 (2025)

Bill overview

  • Bill number: HCR 172 (Concurrent Resolution)
  • Title (short): Requests the Federal Housing Finance Agency (FHFA) to direct Fannie Mae and Freddie Mac to repeal or reduce Guide Section 4703.2 requiring condominium master insurance coverage equal to 100% of replacement cost.
  • Primary sponsor: Rep. Garcia
  • Subject: Condominiums; Federal Housing Finance Agency; property insurance

Purpose / intent

HCR 172 urges the FHFA to direct the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) to repeal Guide Section 4703.2 — or to reduce its requirement — which currently requires condominium master insurance policies to cover “all perils” in an amount equal to 100% of the replacement cost value of the project’s improvements. The resolution frames this as a measure to reduce insurance costs and improve mortgage access and marketability for condominium associations and unit owners in Hawaii.

Background (as stated in the resolution)

  • Hawaii enacted the nation’s first condominium law in 1961; there are ~2,000 condominium associations, ~200,000 units and ~350,000 residents.
  • Many associations face aging common elements, costly repairs, and increased difficulty obtaining property insurance.
  • Guide Section 4703.2 (FHFA-directed Fannie/Freddie guideline) sets a 100% replacement cost, “all perils” minimum for condominium master policies. The resolution asserts that many Hawaiian associations cannot meet this requirement, are effectively excluded from certain mortgage financing, and must buy expensive secondary policies or impose special assessments.

Key provisions / requests

  • The State Legislature (House and Senate concurring) formally urges the FHFA to:
    • Direct Fannie Mae and Freddie Mac to repeal Guide Section 4703.2; or
    • Direct them to reduce the required master policy coverage to less than 100% of replacement cost.
  • Requests transmission of certified copies of the resolution to: FHFA Director; President & CEO of Fannie Mae; CEO of Freddie Mac.

Who is affected

  • Primary: condominium associations and unit owners in Hawaii (potentially nationwide relevance).
  • Secondary: mortgage borrowers whose lenders or secondary market purchasers rely on Fannie Mae/Freddie Mac guidelines; FHFA, Fannie Mae, Freddie Mac (as addressees of the request); insurers and lenders may be indirectly affected if guidelines change.

Procedural / timeline notes

  • Offered: March 7, 2025 (metadata). Referred to CPC, FIN (referral sheet 22) on March 14, 2025.
  • Actions recorded June 2–3, 2025: laid before House, adopted, read and adopted by Senate, reported enrolled, signed, and filed with the Secretary of State (filed with Secretary of State on 2025-06-03).

Limitations and likely effects

  • HCR 172 is a non‑binding concurrent resolution; it cannot directly change FHFA, Fannie Mae, or Freddie Mac rules. It expresses the State’s formal request and seeks to influence federal policy.
  • If FHFA directs a change, possible effects include lower insurance costs for some associations and expanded mortgage eligibility — but potential trade-offs could include increased exposure to insurers/lenders depending on coverage reductions.

Compiled from official sources — confirm details with the bill’s official record.

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