Congress helps condominium unit buyers - changes to FHA loan requirements

Just before the summer recess, in an amazing moment of bipartisanship, both houses of Congress voted unanimously to change the required percentage of owner occupancy in condominiums from 50% to 35% (unless FHA can prove that a higher percentage is justified within 90 day of this legislation becoming law on July 29, 2016) and made several other helpful changes. They are as follows: 

 

·      Requires FHA to make the recertification process “substantially less burdensome than original certification” and “to consider lengthening the time between certifications” {emphasis added}. 

·      FHA must consider “factors relating to the economy of the locality in which the project is located” in granting exceptions to FHA commercial space requirements (the percentage of commercial to residential space in a project). This could be significant in Hampton Roads with the recent increase in the number of mixed-use condominium projects in our area.

·      Within 90 days of this legislation becoming law FHA must stop rejecting condominiums that collect fees when a unit is transferred to a buyer as long as those fees go to the association for common expenses.

But don’t get too excited about it yet!  It also appears that the bill requires FHA to put the new/revised requirements in their regulations and publishes them. We will keep you posted on this important development.   But now we cannot say that Congress did nothing of significance this year.