FHA Eases Some New Condo Lending Rules
By Ian B. Murphy
Commercial Record Staff Writer
Today
________________________________________
With an eye on the “volatility” of the condo market, the Federal Housing Administration (FHA) has backed off some of the stingy new rules for condo lending set to be implemented Dec. 7.
After a meeting with the Mortgage Bankers Association last week, the FHA made the following changes to its June 12 condo letter in a new letter dated Nov. 6:
• Spot loan approvals can continue until Feb. 1.
• The FHA will allow a 50 percent concentration of FHA loans – up from 30 percent – in condo buildings, and well-qualified buildings can have up to 100 percent.
• A 50 percent owner-occupancy requirement for new condo projects.
• The presale requirement has been reduced to 30 percent of new projects.
The original implementation date for new condo rules was Nov. 1, but that date was pushed back to Dec. 7. The above rules, except the spot loan approval, are all labeled as “temporary,” effective through Dec. 30 – although the FHA reserves the right to extend that date.
“They’ll take more loans on any given project, which is good news,” said Steven Marcus, a partner at Marcus, Errico, Emmer and Brooks, a Braintree, Mass., law firm specializing in condo law. “The FHA going to 30 percent [presale requirement] is quite helpful for developers, purchasers and new developments.”
Marcus also stressed the importance of the relaxation of new condo association reserve study rules. Instead of requiring a new reserve study every 12 months, no matter what, the new rules require a study current to within 12 months only if the association’s budget doesn’t meet certain guidelines.
To read FHA letter 2009-46 A in its entirety, click here.
Steve Corn,AE
Security Atlantic Mortgage Co., Inc.
499 Thornall St. 2nd Floor
Edison, NJ 08837
s.corn@fhaland.com email
813 966-2160 cell
866 371-1485 Fax
