According to a recent Washington Post article, financing for condo sales may become easier, contributing to real estate market growth.
Current rules limit condo borrowers from obtaining financing unless the condo association has obtained FHA approval for the property as a whole, columnist Kenneth Harney wrote for the Post. Many condo owners are resistant to obtain the FHA approval because it carries higher liabilities for the owner. Common criticisms for the approval include the agency requirement that no more than 50 percent of the units be non-owner occupied, stringent condo fees and the cap on commercial use for the property.
The new regulations would loosen some of these stipulations and release condo owners from some of the liabilities required for FHA approval, making FHA approval easier so that a greater number of condos in the market are FHA approved, Harney stated.
This would greatly help borrowers as FHA sponsored loans provide aid by approving financing for borrowers with lower credit scores allows lower tier borrowers to enter the market at higher rates, and increasing market growth, according to the column.
These loosened regulations could allow a greater number of condo unit owners to obtain FHA financing, boosting market growth in accordance with the Obama Administration's advocation for real estate recovery.
