FHA to review new condo restrictions
The Federal Housing Administration may revise recent regulations some say are hurting purchases and refinances for condominiums.
Last year, the FHA implemented several new restrictions on condo loans it would guarantee. At least half of the units must be owner-occupied for projects built longer than a year ago, and one investor can own no more than 10% of the units. The FHA also forbids refinancing for developments with more than 15% of the units more than 30 days past due.
Rep. Robert Dold, R-Ill., questioned FHA Commissioner Carole Galante on the new restrictions Tuesday at a House subcommittee hearing. Dold said those who cannot unload REO or rent space quickly are unnecessarily shut out of financing.
"I will commit to you here that some of these I think we can make some adjustments. There are others where we have to walk an important line here to assure that FHA loans are stable and operating, because there is a concern about that for th FHA fund," Galante said, referencing the fragile capital reserve accounts.
A group of Democrats sent a letter to Department of Housing and Urban Development Secretary Shaun Donovan in October, claiming condo associations struggled to meet the guidelines.
The FHA endorsed more than $1.7 billion in condo loans from October to December, less than half of the $3.7 billion guaranteed in the same period the year before.
"Since I came in, we've looking at these issues very closely," Galante said.