Effective immediately, the US Department of Housing and Urban Development has loosened the rules regarding condominium financing under the the Federal Housing Administration. The FHA announced that they will be streamlining the recertification process and expanding “owner-occupied” units to encompass second homes that are not owned by investors. This change comes as welcome news to first-time and low to moderate income buyers interested in purchasing a condominium, as well as current homeowners who have been “stuck” in their condominium hoping for a qualified buyer to come along. It also benefits community associations.
These provisions are temporary and will expire in one year until a more comprehensive rule change can be implemented for condominiums. In the meantime, however, these rules will:
1) Revise how the FHA calculates the required owner-occupancy percentage.
2) Updates the requirements for condominium project recertification.
3) Expands insurance coverages for eligible condominium projects.
Finding qualified buyers for condominiums has been a struggle for relators and associations alike. High prices with no help from the FHA make condominium living seem out of reach and unaffordable. This rule change hopefully helps the condominium market by allowing first-time homebuyers to invest in property and enjoy the real affordability of a community.
Where it is hard for new homeowners to secure a property due to cost, it is also difficult for those living in condominiums to sell them. Finding qualified buyers who are able to put 25 to 30 percent down on a property has kept many stuck with a property they would rather sell. By opening the doors to first-time and low to moderate income applicants, those who are looking to sell will find it easier to move along.
Associations are benefiting from this change as well. The inability for units to be insured has made it dually difficult for owners and associations to be appropriately covered. With this change Citizens Property Insurance Corporation is now accepted by FHA which will make the lives of Florida owners and associations much easier through appropriate coverages.
This change is a welcome one that has the ability to revitalize condominium living for both prospective owners and associations. While these rules change, we will be able to help associations transition. New, first-time owners will inevitably have questions about your covenants and restrictions. If you need preparing Frequently Asked Questions sheets or lender questionnaires, please contact your legal counsel.
For more detailed information about this rule change, please refer to the Mortgagee Letter 2015-27 released by the US Department of Housing and Urban Development.