Contrary to its past position on FHA lending guidelines for condominiums, last Friday (July 15, 2016) the Senate passed the Housing Opportunity Through Modernization Act (HR 3700) , and it is now sitting on President Obama’s desk for signature.
The Housing Opportunity through Modernization Act has three major components including amendments to (i) the Section 8 Housing Assistance; (ii) FHA’s requirements for condominium mortgage insurance; and (iii) the Department of Agriculture’s single family housing guaranteed loan program. While all three components are important, the area that impacts condominium associations the most is the modifications to the FHA’s requirements for condominium financing. These amendments include:
- Making it substantially easier to re-certify a condominium project by permitting updating of information rather than resubmitting the required information and requiring FHA to consider increasing the number of years between resubmittals;
- Relaxing the FHA’s existing rule against transfer fees related to the sale of the condominium unit; and
- Reducing the owner occupancy requirement in condominiums from 50% to just 35%.
While not all of these provisions, such as the decrease in the owner occupancy rates, may be popular, the effect of H.R. 3700 will be to ease lending guidelines for condominium projects allowing for greater sales and uses of the properties which, overall, will be a very good thing.
6 responses to “Senate Passes FHA Reforms Regarding Condominiums”
I don’t believe the 50% to 35% will affect most HOA s. The relax of the transfer fee rule will be important as sales increase. Hopefully owner-occupant % will remain high, that increases the overall property value and satisfaction within the community.
Reducing the owner occupancy rate will decrease the value of condo properties. Our HOA is already seeing a different caliber of lessees moving in, people who have no vested interest in keeping our neighborhood attractive or safe. Changing the owner occupancy rate will only increase these types of lessees and the challenges they create. In my personal opinion, H.R. 3700 is not “a very good thing” for condominium owners.
Thank you for the update.
The Federal Government and Colorado State are not going to take any time or effort to investigate and confirm the legal applications of guidelines, paperwork or verifiable ‘conditions’ needed to truthfully apply H.R. 3700 requirements. With millions of dollars of Homeowners Association Members investments [homes] run by ‘unpaid, unlicensed, uneducated volunteers’.
I agree with several other people. Why should a investment firm own and rent out 15 units in a building. Then the board of directors for the association is made up of several of these persons making decisions and they don’t live there and will not take care of the common area. What is a person to do. They have the majority vote. This should be illegal.
Our Board has always been run by real estate agents who make their living from the complex. I do think a provision against this should be made law. They have made financial decisions that directly benefit them. (litigation that assess’ the homeowner’s forcing many out when inventory is low). Their response to this is always the same , “then, they can’ afford to live here.” It is so criminal, I’m surprised there hasn’t been a class action suit against these people.