Historically, it hasn’t been easy to get a condo project FHA approved. FHA has many rules and requirements that many associations are not able to meet. HUD has been under increasing pressure to tweak the requirements to allow more people to achieve the American dream of homeownership. On august 14th 2019, HUD announced new changes in Docket No. FR-5715-F-02 to the National Housing Act that will allow spot approvals to individual condo units without approval of the entire condo project.
There will be certain eligibility requirements and stipulations the condo unit, association and owner will have to meet for approval. Only certain units will be approved that meet the requirements and there will be a limit on how many units can get FHA approved in each building. The new changes will open the opportunity for FHA loans to many people; some of which have been living in their units for many years while dealing with rising costs due to deferred maintenance and special assessments. These rule changes allow for seniors who live in non FHA approved buildings to seek out a reverse mortgage in order to live more comfortably during retirement.
“Under the revised guidelines – which take effect Oct. 15, 2019 – an individual condo unit in a building of 10 units or more may be eligible for spot approval if no more than 10% of the units are FHA-insured. For units in buildings with fewer than 10 units, no more than two units can have FHA insurance. The FHA is also extending the recertification deadline for approved condo projects from two to three years, and it will insure more mixed-use projects, or those with more commercial space, to be eligible, stating that approved projects can now have up to 35% of their square footage dedicated to non-residential use. The agency also loosened restrictions on owner-occupancy rules, stating that eligible condo projects can now be just 50% owner-occupied. It also said it will insure up to 50% of units in any given project.”https://www.housingwire.com/articles/49851-fha-to-make-financing-easier-for-condo-owners?fbclid=IwAR2dMPSo2sv1LzXy_Lu4XL8hk7ICq9SvhuceYSUZ5Gnd6gycOz5ucunhLzg
“In the past when a senior was interested in a reverse mortgage, we couldn’t move forward unless the entire condo building was FHA approved. If it wasn’t already approved, it was practically impossible to get the HOA to cooperate with us to get the building approved. Now, seniors can apply for spot FHA approval of their individual condo and if approved, they will be able to apply for a reverse mortgage to get rid of their monthly mortgage payments and access some of their equity to provide for a more comfortable lifestyle.” Says Jeff Foody (MLO 253303) President of Northwest Reverse Mortgage.
“While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs. As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually. U.S. Housing and Urban Development Secretary Ben Carson said “Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them,” “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”https://www.hud.gov/press/press_releases_media_advisories/HUD_No_19_121
The new changes will go into effect October 15th 2019. Northwest Reverse Mortgage is ready and able to help you get your unit approved. Reach out to us today if you have any questions about the changes and how it may affect you.