The U.S. Senate passed H.R. 3700, the Housing Opportunity Through Modernization Act, unanimously. Now, it just needs President Obama's signature.
This legislation includes reforms to current Federal Housing Administration restrictions on condominium financing, and is supported by the National Association of Realtors, among others.
These changes will make the Federal Housing Administration’s recertification process much easier, and it will lower the FHA’s current owner-occupancy requirement from 50% to 35%. The bill also requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.
Previously, the bill passed in the House of Representatives by unanimous vote in February.
The FHA’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 in 2015 by then NAR President Chris Polychron.
Current NAR President Tom Salomone oultined the opportunity. "Condominiums often represent an affordable option that's just right for first-time and low-to-moderate income homebuyers. Unfortunately, overly burdensome restrictions on condo financing have for too long put that option out of reach for many creditworthy borrowers.”
"This legislation meets those restrictions head on, putting the dream of homeownership back in reach for more Americans,” Salomone said. "Tight inventory and rising home prices are a reality of today's market, and mortgage credit is hard to come by.”
“We should take every opportunity to clear the path for well-qualified borrowers to purchase a home when they're ready, and this legislation does just that,” he said.
And the market for affordable homes could get much more difficult over the next several years.
About 19 million Baby Boomers want to buy a home, with 8 million saying they want to do it within the next four years, according to a recent survey from Freddie Mac. Unfortunately for Millennials, about half of the 19 million said they are looking to pay less.
With that many potential homebuyers moving into the market, first-time homebuyers could struggle with the competition.
"Sens. Tim Scott, R-SC, and Robert Menendez, D-NJ, have done tremendous work to see H.R. 3700 move forward, and we're thankful for their support, Salamone said. “Realtors made their voices heard as well, reaching out to their senators and representatives to remind them of how important this issue is to homeownership."
"We look forward to seeing this legislation signed into law so homebuyers can start seeing some much-needed relief," he said.