By now, it is no secret that the FHA certification and recertification processes are not overly friendly and considered by most to be overwhelming, burdensome, complicated, and confusing. There are other “colorful” adjectives that have been used in the industry to describe these processes that will not be repeated in this blog. Nevertheless, the public outcry over the FHA (re)certification process was heard by the federal government, which resulted in the introduction of H.R. 3700 (Housing Opportunity through Modernization Act) during the 2015-2016 federal legislative season.
H.R. 3700 was introduced for the purpose of reforming the process utilized by FHA to certify condominium associations. On July 29, 2016, H.R. 3700 was signed into law by President Obama. H.R. 3700 has been supported by CAI and considered a much needed change in the industry.
Key changes set forth in H.R. 3700 include the following:
- Requirement that FHA modify its certification requirements for condominium mortgage insurance to make recertifications substantially less burdensome than original certifications.
- The FHA must consider lengthening the time between certifications for approved properties and allowing information to be updated rather than resubmitted.
- A HUD field office must make decisions regarding exemptions to current FHA commercial space requirements and must consider factors relating to the economy of the locality in which the project is located.
- The FHA must issue guidance regarding the percentage of units that must be occupied by the owners (or sold to owners intending to meet such occupancy requirements) in order for a condominium to be eligible for FHA mortgage insurance.
Now that the bill is officially law, the FHA will begin its implementation, which will involve changes to FHA regulations and existing agency guidelines. Stay tuned for updates as they develop!!