If a group of Congressman gets their way there could be some action in the near future regarding FHA condo standards.   69 Congressman signed a letter to FHA asking the mortgage insurer to ease underwriting standards on condos. The congressmen are not fooling anyone.  What they really mean is lowering the FHA standards on condos.   Government has a history of lowering standards and then declaring victory when the new reduced benchmark is reached.  I do not think this is the direction we need to be headed in.  Wasn’t it reduced standards that got us into this mess to begin with?  I think more time needs to be spent addressing the problems as to why associations are not meeting FHA requirements to begin with.

That’s just my opinion.  What do you think?

photo by: Luigi Diamanti

 

 

69 Congressmen Tell HUD: Ease Up on Condo Rules

By: Paul Muolo

In a new letter to HUD secretary Shaun Donovan, 69 members of Congress asked the agency to ease underwriting standards on condominium loans financed by the Federal Housing Administration.

The members of Congress—Republicans and Democrats alike—want HUD to adjust guidelines in four different areas, including rules mandating that at least 50% of a building’s units be owner-occupied.

“The owner-occupancy limitation includes all REO used as rental property,” they write. “This creates significant problems for owners wishing to sell their unit, particularly in today’s real estate climate.”

They also seek an easing of standards on delinquent assessments, certification requirements, and commercial space. In the latter, FHA prohibits loans on any property that has more than 25% commercial space.

On delinquent assessments, condo boards must certify that no more than 15% of units are 30 days or more in arrears. But the rule “does not take into consideration the overall health” of a condominium association, the congressmen argue