Under Further Review: Feds Taking Second Look at FHA Condo Standards

closeIt's complicated. It always is. But the big takeaway from recent statements by Federal Housing Administration commish David Stevens was that the FHA is planning a tightening of standards, which could in turn make it harder for first-time home-buyers to get financing through the FHA's low-down-payment mortgage program. This is news for those looking to buy condominiums in New York City and elsewhere, obviously, but it's not entirely clear just what kind of news this is, just yet. In the Boston Globe, attorney Richard Vetstein delivers some real talk on the likely effects of the tightening regs."The net effect of these new guidelines, combined with the recent Fannie Mae guidelines, is that it will be much tougher to obtain condominium financing as many projects will not be able to pass muster," he warns. "Condominium associations, trustees, managers, lenders and buyers need to prepare and do a lot more work to approve condominium loans." The idea of the FHA remains, ostensibly, to offer low down payments for home buyers, easy financing for home purchases and lower-than-average mortgage rates, but these new regulations suggest that the FHA is going to have a harder time moving forward with these given the damage caused to the bigger economy by all those terrible mortgages you maybe heard about. That said, it's not all bad news. Stevens has delayed the date-effective on the regulations to November 2, and they're subject to further review. The National Association of Home Builders will lobby the FHA on loosening the rule limiting the concentration of FHA-insured mortgages to no more than 30 percent of a project. The NAHB wants to see that number at more like 100 percent. We'll keep you posted on what happens.

NYC Daily Real Estate Blog