Earlier this year, a federal court in Cheyenne was scheduled to hear arguments in a construction dispute that had nothing to do with mortgages on the surface. The developer behind the Hoback Club, a luxury condo project rising in the shadow of the Aerial Tram in Teton Village, was suing the contractor it had hired to finish the building, with a hearing set for January 7, 2026, before Chief U.S. District Judge Kelly Rankin.
For a buyer scrolling listings at $2.4 million in Teton Village, that lawsuit sounds like someone else's problem. It isn't. The number that actually decides whether you can get a standard mortgage on a Teton Village condo isn't the price on the listing. It's whether the building itself has cleared a set of financial and legal checks that Fannie Mae and Freddie Mac run on every condo project before they'll agree to buy the loan from your lender. Fail one of those checks, and the same $2.4 million unit that would have needed 20% down under a conventional loan can suddenly require 25% down at a rate running a point or more higher, regardless of how strong your own credit and income look on paper.
The Six-Point Test Your Lender Runs Before You See a Term Sheet
Before a lender can sell your loan to Fannie Mae or Freddie Mac, it has to confirm the entire condo project, not just your unit, meets a set of standards known as warrantability. On March 18, 2026, both agencies issued a coordinated update that tightened several of these tests and eliminated a shortcut lenders had been using to skip full reviews, according to an analysis of the updated guidelines.
| Test | Threshold | 2026 change |
|---|---|---|
| Reserve funding | At least 10% of budgeted assessment income | Rises to 15% for loan applications dated on or after January 4, 2027 |
| Delinquency | Fewer than 15% of units 60+ days late on dues | No change |
| Single-entity ownership | No one entity owns more than 20% of units in a 21-plus unit project | Still applies |
| Presale | At least 50% of units sold or under contract | Still applies |
| Insurance | Master policy at replacement cost | Per-unit deductible capped at $50,000 for loans dated on or after July 1, 2026 |
| Commercial space | No more than 35% of total project square footage | No change |
The same March 2026 update actually loosened one rule that used to trip up buildings with a lot of renters. The old cap that made a project non-warrantable once more than half its units were investor-owned was retired, a change aimed mostly at urban high-rises but relevant anywhere short-term rentals are common, including a resort core like Teton Village.
None of those six tests mention lawsuits directly. But Fannie Mae's underwriting guidance also treats active or pending litigation against the HOA or the building's structure as its own independent disqualifier, separate from the checklist above, until the case resolves. That's the piece that turns a courtroom filing in Cheyenne into a financing problem three states away.
Why the Lawsuit Is Also an Underwriting Problem
The Hoback Club sits at the base of the Aerial Tram, one of the more prominent new developments in the village. The dispute at the center of the case is between the project's developer and the contractor it hired to complete construction, and the litigation was active enough in early 2026 to warrant a hearing in federal court. That kind of open dispute over a building's structure is exactly the category of litigation that keeps a condo project out of conventional financing until it's cleared, no matter how the individual units show or price.
There's a second layer specific to this building that has nothing to do with the lawsuit. Some Hoback Club residences aren't sold as standard condo deeds at all. They're marketed as shares in a private club, with owners buying a lock-off residence tied to club membership rather than fee-simple ownership. Products structured that way typically fall outside Fannie Mae and Freddie Mac review altogether, litigation or not, because they were never built to be financed with a conventional mortgage in the first place. A buyer looking at a Hoback Club listing today may be facing two separate reasons a standard 20%-down loan isn't available on that specific unit, and neither one shows up in the square footage or the asking price.
The Four Seasons Sale Adds a Second Variable
Litigation isn't the only event that can move a building's warrantability status. In February 2026, the Four Seasons Resort and Residences Jackson Hole was sold as part of a $1.1 billion deal covering two hotels. Host Hotels and Resorts, which had bought the property in cash for $315 million back in 2022, announced the sale.
Condo-hotel buildings like the Four Seasons run on a hybrid model: some residences are whole-owned units that can opt into the hotel's rental program, others carry fractional or residence-club structures similar to what's found at the Hoback Club. A change in hotel ownership doesn't unwind a mortgage that already closed, but it does reset the things a lender will look at on the next resale: the operating budget, staffing costs, and reserve contributions that feed directly into the reserve-funding and insurance lines on the checklist above, plus the rental-program terms attached to individual units. A building that cleared warrantability review under the old ownership isn't automatically warrantable under the new one. Anyone buying at the Four Seasons this year should expect their lender to run a fresh project review rather than lean on a status check from before the sale closed.
What the Difference Actually Costs
When a building fails one of these tests, the loan doesn't disappear, it just moves to a different shelf. Buyers of non-warrantable units typically end up in a portfolio or non-QM loan, and as of 2026 those loans commonly ask for 10% to 25% down against a conventional loan's usual 20%, with rates running roughly half a point to a point and a half above conventional pricing. On a $2.5 million purchase, that gap in down payment alone can mean writing a check for several hundred thousand dollars more at closing, before the rate difference ever shows up on a mortgage statement.
That's the reason two units in Teton Village priced within $50,000 of each other can carry two very different real costs of ownership. The gap doesn't come from the finishes, the view, or the distance to the lift. It comes from whether the building cleared six specific tests a lender runs on paper, months before an appraiser ever walks through the door.
Five Questions to Ask Before You Write an Offer
- Ask your lender to run the project through Fannie Mae's condo project review before you get attached to a specific unit, not after you're already under contract.
- Request the HOA's current reserve study and operating budget, and check the reserve line against the 10% threshold, which climbs to 15% for loans dated on or after January 4, 2027.
- Ask directly whether the HOA or the building's structure is named in any active or pending litigation, and get the answer in writing.
- If the unit is marketed as a residence club, fractional interest, or lock-off share rather than a standard deed, confirm in writing whether it qualifies for any conventional financing at all.
- If the building recently changed hotel or management ownership, ask how the sale affected the rental program, the operating budget, and the reserve contribution schedule, since all three feed the next warrantability review.
FAQ
Does this only affect condos, or does it touch single-family homes in Teton Village too? Warrantability review is specific to condo and co-op projects, where a lender has to evaluate the whole building rather than one deed. Single-family homes on their own lots, including many of the ski-access houses in enclaves around the village, aren't reviewed as a shared project, so this particular friction doesn't apply to them the same way.
If a building is non-warrantable now, does it stay that way? No. Litigation can settle, presale counts can climb as units close, and reserves can be rebuilt over time. A building that fails a review today can pass a later one once whatever tripped the checklist gets resolved, which is why it's worth asking a lender to recheck status close to closing rather than relying on a status pulled months earlier.
Does the Hoback Club litigation mean the project itself is a bad investment? The lawsuit is a financing and diligence question, not a verdict on the project's long-term value. It shapes how a buyer needs to finance a purchase there right now. It doesn't answer whether the address fits someone's plans.
If you're comparing a specific building in Teton Village against options elsewhere in the valley and want a straight answer on where a project stands before you fall for a unit, Bryan Lyster has spent years working these transactions building by building. Let's Connect.
