More Realistic Lender Rules for HOAs would permit more Buyers to Buy Affordable Homes

Long Beach shoreline and condo buildingsAccording to the National Association of Realtors, there are between 145,000 and 155,000 condominium projects in the United States.  As background information, in order for FHA loans to be approved in a condo development, the entire association must be approved by HUD (per its guidelines) and this approval must be obtained every 2 years. That is a lot of paperwork for most HOAs to focus on, along with all their other usual work in maintaining their association, via their Boards of Directors.   "As of January 2019, FHA has approved only 9,427 of 52,410 condominium project applications." Hence, many association in the U.S.--certainly in Long Beach--have dropped their former approvals, and sellers must now depend on buyers who obtain conventional financing.  But they are losing prospective buyers, since many first-time buyers opt for FHA loans for a variety of reasons.

HUD has been asked to lengthen the recertification process time, as well as loosen up on other items such as owner-occupancy requirements.   Currently, 50% owner occupancy is required for FHA loans, but HUD is being asked to reduce that to 35%--because many HOAs do not have rules about how many rentals are allowed, and lower owner occupancy ratios are excluding buyers bringing FHA loans with them. Also, HUD restricts the number of FHA loans allowed in a project to a very low percentage, but eliminating that rule would allow more buyers to buy. In the past, "spot approvals" were allowed, meaning one unit could be approved for an FHA loan in a non-approved building, as long as that HOA met certain criteria.  Spot approvals are once again being requested, again, this would increase homeownership.  The two-year approval period is asked to be increased to five years, this would vastly help Boards of Directors and sellers alike.

Given the almost daily appearance of lack of affordability for buyers in the newsfeed, an opportunity to buy a condominium, which is a lower sales price market compared to houses in many areas, is an opportunity for homeownership for all.

If you are interested in a condominium purchase, or finding out about the features of condo owership, please contact me via phone or email. I am familiar with condos, and would be happy to share my information with you.

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

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