Both the House and the Senate approved a bill by unanimous consent that will change FHA condo rules. New legislation will streamline the FHA’s certification requirements, relax owner-occupancy requirements, and make condo financing more accessible.
On July 14, 2016, the Senate passed H.R. 3700, the “Housing Opportunity Through Modernization Act” that has been long supported by the National Association of Reatlors®. The bill passed by unanimous consent (427-0) in the House of Representatives in February, and will now continue on to President Obama’s desk for his signature.
The new bill will make the Federal Housing Administration’s (FHA) recertification process for condominium developments much easier. The current FHA recertification process is often costly, and condo developments must repeat this process every 24 months. Advocates hope the less restrictive recertification rules will allow for more condo communities to apply which equates to more housing possibilities for FHA homebuyers. The legislation will also lower the FHA’s current owner-occupancy requirement from 50% to 35%, and once in effect, the FHA will be required to replace an existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.
The FHA’s current restrictions on condominium financing present a significant hurdle for one of the nation’s most affordable housing options. H.R. 3700 includes changes to FHA policies that will give current and potential buyers of condos access to more flexible and affordable financing, and a wider choice of condo developments.
Condos are often the most affordable homeownership option for first-time buyers, small families, single people, urban residents, and older Americans. Tight inventory and rising home prices are a reality of today’s market, and mortgage credit is difficult to secure. The aim of the Federal Housing Administration is to empower creditworthy first-time buyers to enter into homeownership and start building equity of their own. Now these homebuyers will have more options.