Both buyers and condo unit owners will soon receive very good news on mortgage financing. Even if the authorities haven’t said much, some changes will be made for condo rules that provided huge unit numbers not entitled for low down payment insured mortgages. Revisions may remove several obstacles that put off condo owners association boards from searching for FHA re-certifications or approvals for their constructions throughout the past 18 months.
There are certain regulations established by agencies that state that individual unit inside a building can’t be sold out to home buyers that use FHA insured mortgages except the property have been entirely granted for financing. Based on the testimonies of builders, realtors, experts, and builders, the rules of the FHA have become too strict.
The president of the National Association of Realtors declared that FHA’s strict rules had disastrous effects on the real estate market, and that condo unit residents will be the ones who will suffer the most. They will find themselves unable to sell their units because it will be almost impossible to get an FHA approval with all that strict criteria.
FHA officials say that their requirements are necessary in order to avoid fund loses. However, they said that they showed willingness to re-evaluate the criteria that upset both condo owners and the real estate market. Some of the rules that upset condo owners are:
FHA requires that 50% of building should be occupied by owners. This standard alone made a large number of condo units lose the FHA financing because many investors purchased units only to rent them and not sell them.
Delinquent condo association payments
FHA does not approve a project if more than 15% of the units have a 30 days delay on payments at the condo association. Because of the global crisis this is a serious problem even for many rich associations. Some owners were really angry with the measure and they paid the amount of delinquent fees in order to get FHA approval.
Nonresidential space usage
The agency wants that 25 percent of the floor space in a unit to be included in a commercial project, but many think that the measure is unrealistic for a condo project situated in an urban area.
When it comes to reserves and insurance, the list is long and filled with extra requirements. FHA is expected to elucidate its personal liability language. In addition, there will be modifications in its future rules for both sellers and buyers. Now, everybody waits for the new legislation and rules and hopes that the changes will be convenient enough in order to make condo unit owners apply for approvals in a large number.
Led by Allan Kleer, The Kleer Team is dedicated to representing Buyers and Sellers of condos and homes in Greater Miami and Miami Beach. Contact us today. Let us work on your behalf to exceed your Miami Beach real estate expectations.