New rules from the Federal Housing Administration could make it easier to get FHA-backed home loans for condominiums. The rules, which went into effect yesterday, were written to address current market conditions and the glut of empty condominiums left following the real estate bust.
The biggest changes include reducing the number of units in a new condominium that must be owner-occupied, eliminating a rule that banned loans to condos with "right of first-refusal" language in association bylaws, increasing the number of units that can have FHA financing, and cutting the expensive requirement of having an attorney review condominium documents before a sale.
Some of the rule changes, however, are temporary through December 2010. Others actually tighten FHA guidelines. For example, as of today, condos are eligible only if no more than 15 percent of units are more than 30 days past due on association fees. Also, while other states are now allowed to independently approve FHA mortgages, Florida is still required to have projects submit applications to the U.S. Department of Housing and Urban Development.
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