On September 27th, FHA announced their new proposals to ease their process for approving both condo projects and individual units in a non-approved project. The real estate community sees this as a step in the right direction.
The intent is to make more condo units available for FFHA-insured financing, thus helping to make more affordable housing available to low to moderate income home buyers and those with a limited down payment. It should also help to boost the homeownership rate which has declined recently.
FHA’s ultimate goal is to make it easier for FHA-approved mortgagees to originate condominium unit mortgages in approved condominium projects, while maintaining the necessary safeguards and monitoring that protect borrowers and FHA’s Mutual Mortgage Insurance Fund. This also expands opportunities for lenders to provide this financing.
Here are some highlights of the new proposals:
- A new range for project owner occupancy rate from 25% to 75%; presently required at a minimum of 50%
- Range for allowable Commercial/Non-Residential space between 25% to 60%; presently limited to 50%
- No approvals for proposed or new construction projects, but approvals for legal phases upon completion
- Process for a DE lender to obtain FHA’s Delegated Project Approval authority (DELRAP)
- Proposed specific guidelines for the approval of single units in non-approved projects.
- Require recertification of approved projects every 3 years instead of current 2 year requirement.
FHA is now seeking comment on their proposals. Although the comment period is open for 60 days, FHA encourages all interested parties to submit comments as soon as possible.
For much more detailed information on these proposed changes to the FHA Condo approval process, you can review their notice posted in the Federal Register (FHA Condo Changes). This one’s not too bad, only 43 pages.
If you are an FHA approved lender, or thinking of getting approved, you may want to comment on these proposals. Now is your opportunity to have your voice heard. Don’t wait; take the time to get involved.
If you have something to say, speak up. Don’t let others do the talking for you.