Federal Housing Administration Commissioner Brian Montgomery recently told attendees at the National Association of REALTORS® meetings in Washington D.C. that the agency is working to revise its condominium approval rules and expects a final rule to be announced soon.
Montgomery called condos a “mainstay of affordable housing” for seniors and first-time buyers.
Among the proposed revisions is the ability to allow owner-occupancy determinations on a case-by-case basis and to allow up to 45% of commercial space in a building without documentation, as well as the implementation of a five-year approval period for project certification.
In his speech, Montgomery also said the final rule may also allow for spot approvals.
“We anticipate that the updated regulations will be more flexible, less prescriptive and more reflective of the current market than existing provisions,” Montgomery said. “It may also include single unit approvals for loans that meet HUD standards for unapproved projects, allowing HUD to set the specific percentage.”
The FHA issued proposed changes to its condo rules in 2016 that promised to lift a number of restrictions and streamline the certification process, but it has yet to issue a final rule.
Last summer, 174 Congress members signed a letter to Department of Housing and Urban Development Secretary Ben Carson asking him to make a move on the proposal. Then in February, after no such move was made, NAR and the National Reverse Mortgage Lenders Association urged the agency to quit dragging its feet on the issue, asserting that too many homeowners were being shut out of financing under FHA’s current condo policies.
In his speech, Montgomery called condos an “opportunity” to address affordable housing concerns, and while he did not say exactly when the industry can expect a final ruling, he said the final rule was under review by the Office of Management and Budget and suggested a resolution was near.