With an eye on the “volatility” of the condo market, the Federal Housing Administration (FHA) has backed off some of the stingy new rules for condominium lending set to be implemented Dec. 7.
After a meeting with the Mortgage Bankers Association last week, the FHA made the following changes to its June 12 condominium guidance letter in a new letter dated Nov. 6:
- Spot loan approvals can continue until Feb. 1, 2010.
- The FHA will allow a 50 % concentration of FHA loans – up from 30 %- in condominium buildings, and well-qualified buildings can have up to 100 %.
- A 50 % owner-occupancy requirement for new condo projects.
- The pre-sale requirement has been reduced to 30 % of new projects.
- Reserve study requirement eliminated. Condominium budget must provide for funding reserve account for at least 10% of operating budget
The original implementation date for new condo rules was Nov. 1, but that date was pushed back to Dec. 7. The above rules, except the spot loan approval, are all labeled as “temporary,” effective through Dec. 30 – although the FHA reserves the right to extend that date.
A copy of the new guidelines can be found here.
As always, contact Richard Vetstein with any questions.