The FHA has been busy for the past few weeks, first tightening rules designed to protect the FHA mortgage insurance fund from unnecessary risks and then increasing two types of fees that borrowers will be required to pay.
But whatever came of the promise from FHA higher-ups to revisit certain problematic provisions with the new FHA Condominium Project Approval and Processing Guidelines issued in June 2011?
Somewhat overshadowed by all the recent FHA activity was Acting FHA Commissioner Carol Galante’s statement on February 28, 2012 to a House Subcommittee regarding possible revisions to the new Guidelines. Responding to a question from Congressman Robert Dold (R. – Ill.) regarding individuals being unable to obtain FHA approval or financing because of the new restrictions, Galante said:
“I will commit to you here that some of these I think we can make some adjustments. There are others where we have to walk an important line here to assure FHA loans are stable and operating, because there is a concern about that for the FHA fund.”
CAI-National, and its Federal Legislative Action Committee lead by Hill Wallack LLP Partner Ronald L. Perl, Esq., has been at the forefront in the opposition to many of these new restrictions, opposing the ban on deed-based transfer fees, new requirements pertaining to special assessments and litigation, and the overly-restrictive certification of compliance, which imposes a “continuing obligation” provision that could subject board members or property managers to significant penalties.
But as these issues linger, FHA approvals for existing condominium associations continue to expire with little to no hope of becoming recertified, directly affecting the ability of potential home buyers to secure FHA-insured loans. Reports indicate that the FHA endorsed only $1.7 billion in condominium loans from October to December of 2011, less than half of the $3.7 billion guaranteed in the previous time period a year earlier – October to December of 2010.
For up-to-date information on the changes to the FHA’s Condominium Project Approval and Processing Guidelines, click the FHA Central tab or follow us on Twitter: @njcondolaw.