FHA working on plan to approve more condo mortgages
WASHINGTON – May 21, 2019 – Realtors® in Washington last week met with Department of Housing and Urban Development (HUD) Acting Deputy Secretary and Federal Housing Commissioner Brian Montgomery. During that meeting, Montgomery told them about a Federal Housing Administration (FHA) effort to finalize a new rule surrounding condominium policies.
The National Association of Realtors® (NAR) supports changes because it will open up more affordable housing opportunities to first-time buyers and others. The regulation currently in the works would allow owner-occupancy level determination on a case-by-case basis, up to 45% commercial space without documentation, and a five-year approval period for project certification.
"As you all know, one opportunity is condominiums, which have been traditionally a mainstay of affordable housing for both first-time homeowners and seniors," Montgomery said. "We've been in the process of revising our condominium project approval requirements to get to a final rule and update our policies.
"We anticipate that the updated regulations will be more flexible, less prescriptive and more reflective of the current market than existing provisions. It may also include single-unit approvals for loans that meet HUD standards for unapproved projects, allowing HUD to set the specific percentage."
The final rule is currently under review by the Office of Management and Budget, but Montgomery believes the end of the process is in sight.
Montgomery spoke at length about current U.S. affordable housing problems.
"You all know better than most that affordability is an enormous challenge in many markets around the country," Montgomery said. "Large constraints on the housing market by regulations have exacerbated the shortage for hard-working families who are employed and willing to buy but continue to be priced out. The good news is that in today's economy, we have job growth, low unemployment and wage gains that have provided an additional shot in the arm."
Montgomery said that overregulation and misguided zoning laws have helped contribute to the housing affordability and accessibility issues facing many U.S. markets.
"The combination of regulatory overreach and an aging housing stock has meant not enough affordable units are left – or worse, being built," he said. "Zoning, environmental and sometimes labor restrictions have made it more difficult for areas across the country to meet the growing [housing] demand. We will need continued wage and economic growth and regulatory reform to mitigate affordability constraints. This will also require that not just HUD, but states and localities ease the regulatory burden and other impediments to development."
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