The Federal Housing Administration this week extended its current rules regarding condominium lending as it continues to work on permanent updates.
In a new mortgagee letter, the FHA implemented an open-ended extension of the existing condominium rules as laid out in previous letters released in 2012 and 2015 â€” essentially freezing the status quo until FHA updates the Single Family Housing Police Handbook 4000.1 with a final rule for condos.
â€œThis extension, without changes to existing temporary provisions, ensures that mortgagees, real estate professionals, and others may continue to work with borrowers seeking FHA-insured mortgages on condominium units in FHA-approved condominium projects,â€� the department said in an e-mail announcing the new letter.
The FHA requires that condo communities meet certain requirements in order for homebuyers to receive government-backed mortgages, including rules regarding insurance and the percentage of owner-occupied units.
Last fall, the agency relaxed the latter benchmark, allowing homebuyers to use FHA loans â€” including Home Equity Conversion Mortgages â€” to purchase condos in existing communities with 35% owner-occupancy, down from the previous 50% threshold. For new communities, that number sits at 30%.Â
The FHA also rolled out a proposed rule last September that would empower the agency to approve single units in otherwise unapproved developments, and also provide an allowable range of owner occupancy â€” between 25% and 75% â€” instead of a hard-and-fast threshold.Â
That proposal remains under consideration, the FHA said in its most recent mortgagee letter.
â€œHUD received comments to the rule and is currently evaluating those comments,â€� the letter reads. â€œThis extension will allow continuance of condominium project approval until the condominium rulemaking process is completed.â€�
Read the full letter, 2017-13, on the FHAâ€™s website.
Written by Alex Spanko
Enjoyed Post? Give it a share..