In a new letter to HUD secretary Shaun Donovan, 69 members of Congress ask 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.
Source: National Mortgage News