The Federal Housing Administration's current restrictions on condominium financing present a significant hurdle for one of America's most affordable options, according to testimony given on Capitol Hill by Chris Polychron, the president of the National Association of Realtors.
Polychron testified Wednesday before a hearing of the U.S. House Financial Services subcommittee to offer support for a remedy: H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015.”
The bill includes provisions to help expand housing opportunities, and specifically addresses some of the issues associated with the FHA's current financing policies.
“Condominiums are often the most affordable homeownership option for first-time buyers, small families, single people, urban residents, and older Americans,” Polychron said in prepared testimony. “Unfortunately, current FHA regulations prevent buyers from purchasing condominiums, harm homeowners who need to sell their condominiums, and limit the ability of condominium projects to attract resident buyers.”
The bill would:
- Reform the FHA condo recertification process, a costly process that has to be repeated every two years
- Lower the FHA's current owner-occupancy requirement from 50% to 35%
- Require the FHA to replace their policy on transfer fees with the Federal Housing Finance Agency's less-restrictive model
- Streamline the exemptions process for FHA's rule prohibiting certification of condominium projects with more than 25% commercial space
In particular, H.R. 3700 deals with key problem areas facing buyers and sellers of condominiums, NAR said in a release.
Among these, the bill addresses FHA’s recertification process, taking steps to make it “substantially less burdensome,” according to the bill text. Polychron said that the current FHA recertification process is often costly, and noted that condominium developments must repeat this process every 24 months.
“H.R. 3700 includes changes to FHA policies that will give current owners and potential buyers of condos access to more flexible and affordable financing and a wider choice of approved condo developments,” said Polychron. “This bill contains a number of provisions that NAR supports, and we believe it will help expand housing opportunities at all levels.”
NAR represents more than 1.1 million members involved in all aspects of the residential and commercial real estate industries.