On Wednesday, January 30, NAR President John Smaby strongly urged U.S. Department of Housing and Urban Development (HUD) Secretary Carson to release the long-awaited final Federal Housing Administration (FHA) condominium rules. For the past several years, NAR has been advocating for a revision of the condominium rules that would enable more deserving families to become homeowners without harming FHA's financial stability. As of January 2019, FHA has approved only 9,427 of 52,410 condominium project applications. Given there are approximately 145,000 to 155,000 condominium projects in the U.S., this is an incredible loss of housing options to many prospective homebuyers.
In prior comment letters, NAR has urged that:
- FHA remove the current owner-occupancy requirement and align with Fannie Mae and Freddie Mac policy by allowing lenders to review a condominium project in its entirety. At the very least FHA must decrease allowable owner-occupancy limits from 50 percent to 35 percent without need for additional documentation as directed by Congress under the Housing Opportunities Through Modernization Act of 2016.
- FHA expand the concentration of FHA-insured mortgages within a condo project to 100 percent, especially for new construction.
- FHA allow up to 45 percent commercial space without documentation. Greater levels of commercial space should be evaluated holistically along with the strength of the project, but should not be capped at a specific percentage.
- FHA allow for spot-loan approval.
- FHA implement a five-year approval period for project certification.