Condo associations struggle to meet stricter FHA guidelines
Time is up for many condo associations to benefit from borrowers using mortgages insured by the Federal Housing Administration . Fewer than 10% of the nation's condominiums received recertification nearly two years after a change in requirements.
So for borrowers looking to buy into those properties, they will be unable to obtain FHA-backing and likely need more in down payment.
But it is those requirements, however, getting backlash from condo associations as well as U.S. lawmakers.
About 2,100 condo projects nationwide were reapproved or recertified for FHA-insured mortgages, more than 25,000 certifications expired this year through Sept. 30, according to the Department of Housing and Urban Development .
HUD said uncertified condo associations failed the process for several different reasons., though largely due inability to meet reserve fund requirements, legal disputes, insufficient insurance coverage and high investor ownership.
But in a letter to HUD Secretary Shaun Donovan, U.S. representatives Barney Frank (D-Mass.), Michael Capuano (D-Mass.) and Stephen Lynch (D-Mass.) expressed worry over the new approval process.
The representatives, all three members of the House Committee on Financial Services, urged "the opportunity for public review" on the guidelines before any changes take effect, as well as reconsideration of special assessment and condo fee limits given "current economic conditions."
Condo projects applying for mortgage approval cannot have more than 15% of units more than 30 days behind on fee payments, nor can they have special assessments or loans to make necessary improvements.
"We believe that these factors do not necessarily indicate that the association is in poor fiscal health and as such should be ineligible for FHA mortgage approval," the three representatives wrote in the Oct. 31 letter.
Approval process changes became effective December 2009, requiring condos to apply for recertification every two years. That makes Dec. 7 the latest date a condo's certification can expire without reapplying.
new fha loan limits cash out - News
Yes, this is a scene from Monty Python & the Holy Grail (and the person is eventually knocked over the head), but proponents of extending the higher loan limits hope it doesn't play out that way for them. NAR is asking its members to contact their
"It is essentially two folks for FHA coming out with what they think would be good for the program. What they've created is a set of requirements that make it unnecessarily difficult, if not impossible." The Cotton Mill, a New Orleans condo project,
"For example, you run the loan through DU and receive this message: 'This limited cash-out loan casefile was not underwritten according to the DU Refi Plus expanded eligibility guidelines because the subject property was not identified as a Fannie Mae
I'm wondering if you guys are seeing any changes in underwriting standard [indiscernible] during the quarter and tightening, loosening especially relative to FHA loans and the way those are being underwritten by FHA-approved lenders.
This meant that the loan limit for an FHA loan was between these two numbers, but also always below 95 percent of whatever the local area's median home price was.* The reason this debate is so important is that a reduction in the loan limits almost has
Congress Reconsidering 2012 FHA loan limits?
It’s no secret that several U.S. Government officials are taking action to elevate 2012 FHA limits on home mortgages in an effort to help the struggling housing sector in high cost regions across the country. The Wall Street Journal published a good article discussing different ways the housing industry can be saved and one of the quickest ways would be to raise the FHA limits in 2012. The Federal Housing Administration lowered FHA loan limits on mortgages in an effort to stem loan defaults and better preserve FHA reserves set aside to protect the loan programs against foreclosures and defaults.
According to the State Column, Congressman Leonard Boswell sent a letter to House Conferees to H.R. 2112 urging them to reject language contained in the legislation that would restore the FHA mortgage limits that expired last month.
Will Congress Revert to Higher FHA loan limits to Help Revive the Housing Markets?
Currently, the 2012 FHA loan limits high loans to $625,500. The Senate language, currently being considered by a joint House-Senate conference committee, would revert back to the higher limit of $729,750. I some areas like California or New York, these loan amounts would barely be above average because the housing costs are so much higher in these regions.
According to Boswell, “Not a single FHA Ioan would benefit from a loan limit extension. These higher loan amounts on FHA mortgages for a select few of the very wealthy should not be on the shoulders of the American taxpayers.” He continued, “These limits were set to expire for a reason, so we could reduce the risk assumed by the federal government. “I urge conferees to resist this provision, and put the focus back on moderate and middle income homebuyers not the most affluent.”
Higher FHA Loan Limits to Qualified Borrowers in High Cost Regions Would Help Eliminate the Housing Crisis
Clearly Mr Boswell is playing the class warfare game with ridiculous talk about wealthy Americans. The FHA loan programs were created in 1934 to ensure fair lending and affordable housing. FHA guidelines were tightened this year to reduce loan defaults and taking away the financing opportunities to well-qualified borrowers would likely increase delinquency rates and defaults. The amount of money a borrower has earned or saved should not be a negative factor that is used against them to disqualify their eligibility. In the mortgage world, if a borrower has more earning and significant savings it is considered an asset because it reduces their chances of defaulting on the loan. Hopefully Mr Boswell will reconsider his position as it undermines government financing and the liberty for American citizens.