What’s not to love about a reprieve? The purchase of condos using FHA financing gets new life as home buyers now have an extra 31 days to buy Florida beachfront condos before new guideline changes make it much harder to finance a condo using FHA loans.
Fortunately, our friends at FHA finally figured out that the process (as it stood to be implemented on October 1, 2009) was just not practical for most condominium complexes in this market. So they are now trying to work out the kinks and loosen their guidelines on mortgage loans for these properties.
Currently, as I understand it, two of the rule changes under review include the one that states that no condo complex can have more than 30% of the units FHA-financed; and the other which states that a minimum of 50% of the units need to be owner occupied.
The adjustments to restrictions such as these would be more practical because the makeup of ownership in condo complexes has changed dramatically due to defaults, job losses, and the economy in general. These mandates and all the other criteria also cause condo units to languish and continue to decrease in value. So this little stay of execution is a break both condo buyers and condo sellers need right now especially with spot approvals still valid through 11/2/09.
Here’s a copy of the official notification we received at TriCounty Mortgage:
FHA Delays Issuance of Condo Guidelines
- The Federal Housing Administration announced on Friday that it was delaying implementation of new condominium guidelines until November 2, 2009.
- FHA is modifying certain policies described in Mortgagee Letter 2009-19. The site condo changes that have already taken effect are not affected by this delay.
- Mortgagee Letter 2009-19 provided guidance on the new approval process for Condominium Projects, allowing lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the National Housing Act and 24 CFR 203 of HUD’s regulations.
- FHA had hoped to finalize everything by October 1. However, the new effective date is for case numbers assigned on or after November 2.
So as we continue to sludge through an amorphous blob of rules and regulations in the sea of home loans, we are given a life raft; you should get on board.