WASHINGTON – Nov. 5, 2009 – The Federal Housing Administration (FHA) previously announced a tightening of the rules for condo mortgage approvals, but delayed implementation and a formal announcement from Oct. 1 to Nov. 2, and then Dec. 7, 2010.
After meetings with FHA officials, however, the Mortgage Bankers Association (MBA) has said that rules governing condo mortgage approvals will be less onerous than first announced in an article published by Inman News.
According to Faramarz Moeen-Ziai, a mortgage banker at San Ramon, Calif.-based Bank of Commerce Mortgage, the most important change is the rule on recertification. As first announced, a condo currently certified for the FHA program would have to be recertified. That change could add a time-consuming burden to condo sales. Under the new rules, according to MBA, existing certifications would still be valid.
“If what the MBA says is the deal, (the new rules are) essentially a non-event,” says Moeen-Ziai. “The big deal for us wasn’t the guideline changes – guideline changes happen all the time. It was wiping the slate clean on all previously approved condo projects’ and requiring re-certification.”
The FHA, as announced by the MBA, will also insure up to 50 percent of a condo project’s loans, and up to 100 percent in “well established” condo developments. Earlier versions called for FHA to approve up to 30 percent of loans.
However, MBA says that some things will change. FHA, for example will require that owner-occupants must inhabit at least 50 percent of a condo association’s units.
The FHA has neither confirmed nor denied the MBA announcement.
Source: Inman News, Nov. 5, 2009, Matt Carter
© 2009 Florida Realtors®
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