The Federal Housing Administration (FHA) has backed off a controversial policy that threatened to force condominium associations out of compliance with the agency’s certification rules, Inman reports.
Recently, FHA provided a “workaround,” which covered the agency’s previous demand that condo boards amend their underlying covenants, conditions and restrictions (CC&Rs) to comply with language in the National Housing Act or face rejection of applications for certification.
This language regards “transient,” or short-term rental of units, which is commonly found in “hundreds of association CC&Rs,” according to Inman, that allow Fannie Mae and Freddie Mac as well as other mortgage investors to rent units they acquire through foreclosures under short-term contracts that provide hotel-like services to tenants.
From now on, condo boards have the choice to either amend their CC&Rs to comply with FHA’s policy, or they must provide a statement that affirms there are “no units in the project currently rented for less than 30 days and/or pursuant to the lessor providing any services normally associated with a hotel,” according to Joanne Kuczma, FHA’s head of financing, quotes in the Inman article.
Also included under FHA’s “workaround,” lenders providing FHA financing on individual units must also provide a statement that in the even of a foreclosure they “will not rent the unit for less than 30 days and/or provide any services normally associated with a hotel.”
Written by Jason Oliva
