By Peter Ricci
The Federal Housing Administration (FHA) has eased some of its more stringent condo requirements through August 2014 to better serve the current housing market.
Those requirements, some of which generated quite a bit of controversy with real estate professionals, including restricting financing to condominiums with at least 50 percent of its units occupied and offering no financing for developments with more than 15 percent of its units in serious delinquency.
FHA Condo Requirements Lessened
The FHA has originally argued that its condo requirements were spurred by its troubling financials, which had motivated it to raise its premiums in April. Now, though, it’s changed its tune, and is instead following these requirements:
- No more than 15 percent of the condominium’s units can be 60 days or more delinquent on their association fees; the original rule only allowed for 30 days.
- Half of the units in the developments must still be owner-occupied for units completed more than a year ago.
- New guidelines, however, are now available for how many properties investor can own. Previously, one investor could not own more than 10 percent of the units, but now, investors can own up to 30 percent of the units in some projects.
CAI’s Thomas Skiba – “Excellent News”
The FHA faced opposition from numerous fronts in regards to its condo requirements. Democratic lawmakers appealed to Department of Housing and Urban Development Secretary Shaun Donovan to review the policies, and Republican congressman Robert Dold questioned FHA Acting Director Carol Galante on the validity of the requirements.
Another group that had opposed the requirements was the Community Associations Institute, a trade group of community associations.
Thomas Skiba, the institute’s CEO, spoke highly of the new condo requirements in a HousingWire piece.
“FHA has responded to the critical issues we’ve raised. By doing so, more Americans can obtain FHA-insured mortgages to purchase condominiums,” he said. “This will spark home sales and help tens of thousands of condominium communities begin to recover from the housing slump, and that can only help the national economy.”