Feds Proposing To Allow More FHA Loans To Complexes That Aren’t FHA Certified
FHA loans and FHA approvals is a very big topic among Associations and unit owners, so I made some assumptions as to familiarity of unit owners. I deal with the issue fairly regularly with unit owners and associations.
It is pretty well-accepted that Condo Approval by FHA Helps Residents Sell Their Units because more first time buyers can get mortgages.
The proposed regulations are supposed to make FHA mortgages available to more condo owners. The FHA insures mortgages so that the buyer can make a lower down payments, sometimes as low as 3.5% of the purchase price. A conventional down payment is 20% of the purchase price.
At present, communities have to be certified by FHA to have FHA loans for their unit owners. It is a lengthy and difficult process and condos can spend several thousand dollars just get certified. Some find the certification process too expensive or difficult and don’t bother. he proposed regulations will do away with the certification requirement, in some cases, and let the banks decide whether to make the loans on a case by case basis, that is, “spot approvals.”
For those communities that do have FHA certification, the certification will last longer and the renewal of certification will be much easier.
If mortgages are easier to get, then there will be more buyers who can buy condo units, especially first time buyers. More buyers = higher prices and more marketable units.
Congress told FHA to make consumer-friendly Federal Housing Administration mortgages more widely available in condominiums. These are the proposed regulation published in the Federal Register. Interested people can comment until 11/3. Then, the regulations may or may not be revised before the regulations are adopted. This is one of the final steps in the federal regulation adoption process. The public comment phase means the regulations are almost ready.
The idea is to make FHA loans more available to prospective condo owners.
The million-member National Association of Realtors hailed FHA’s policy switch as “a big win.” CAI is reviewing and submitting suggestions.
Anybody, including unit owners, can read the proposed regulations and submit suggestions. People should be watching what happens to the regulations.
Here is a link to a 2012 article that you wrote on FHA mortgages that explains certification and the problems.
Here is an article from the Hartford Courant concerning the problems with the old FHA requirements.
Here is an article on FHA certification from CTCondoNews by Ed Kowal