One of the biggest changes in the Housing Opportunity Through Modernization Act, passed earlier this year by the US Senate, concerned condominium financing. It’s good news, not just to the National Association of Realtors (NAR), which had supported the changes for some time, but also to condominium owners and buyers.
Condominiums have always represented an affordable option for many buyers. But before the bill was passed, it was difficult for worthy borrowers to access the financing they need to purchase a condominium. Community and housing groups complained that FHA rules and requirements were both unfair and onerous – including the minimum owner-occupancy ratio of 50%, which made it impossible for buildings with lower ratios to qualify for FHA financing.
According to NAR, the bill will “make FHA’s recertification process substantially less burdensome, while lowering the FHA’s current owner-occupancy requirement from 50% to 35%.”
Also affected is the FHA policy around condo unit transfer fees. The bill requires the FHA to adopt the more flexible model used by the Federal Housing Finance Agency.
It is hoped the changes in legislation will open up FHA financing opportunities to more prospective condo buyers across the country, and there’s every chance it will.
In response to the bill, Tom Salomone, current president of NAR, noted: “Tight inventory and rising home prices are a reality of today’s market, and mortgage credit is hard to come by. We should take every opportunity to clear the path for well-qualified borrowers to purchase a home when they’re ready, and this legislation does just that.”