New Federal Housing Administration condo-loan guidelines that took effect Dec. 8 could make it much easier for condo buyers to get a loan.
Under previous guidelines, half the units in a new condo development had to be sold before the FHA would underwrite a mortgage in the complex. New guidelines cut the requirement to 30 percent and raise the ceiling on FHA loans in a development to 50 percent from 30 percent.
The new rules also allow condo associations to turn down an accepted offer if they agree that it’s too low—unless they will be violating the Fair Housing Act. This is expected to motivate many associations to seek FHA-approved status for their buildings.
Even if they solve the vacancy problem, FHA loans can be a tough sell in some buildings, says Miami-area practitioner Madeleine Romanello, an associate with Douglas Elliman Florida.
“An FHA loan still has the connotation of being low-income. Condo boards say, ‘No, we don’t do FHA.’ They don’t understand that the FHA is the only game in town. We could be moving tons of condos if we could get their buildings FHA-approved,” Romanello says.
Source: Investor’s Business Daily, Marilyn Alva (12/10/2009)