FHA officials are considering loosening up requirements that limit the number of individuals eligible for FHA-backed loans, reported The Washington Post this weekend.
FHA-backed loans have become quite popular for home buyers in recent years, as they make it possible for people to invest in a home by offering as little as 3.5 percent of the sale price as a down payment. However, strict rules often make this loan product a frustrating option.
Several of the requirements that draw criticism are in regards to building eligibility. In order for a condo building to be FHA-approved, more than 50 percent of the residents must be owner-occupants, retail and office space must not exceed 25 percent of the entire square footage and more than 15 percent of the units cannot be more than a month behind on their condo association fees. In order for an individual to get an FHA-backed loan for a condo unit, the whole building must be approved.
From the Post:
According to condominium experts, realty agents, lenders and builders, FHA’s rules have become overly strict and have cut off unit buyers from their best source of low-cost mortgage money, thereby frustrating the real estate recovery that the Obama administration says it advocates. Christopher L. Gardner, managing member of FHA Pros, a national consulting firm based in Northridge, Calif., that helps condo boards obtain FHA approvals, said barely 25 percent of all condo projects that are potentially eligible for FHA financing are now approved.
The FHA has expressed a willingness to reconsider some of the issues, reported The Post, but it is unclear what specific requirements will be loosened. We’ll keep you updated as the situation evolves.
This article originally published at http://dc.urbanturf.com/articles/blog/fha_may_loosen_up_rules_regulating_condo_sales/5562
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