On Tuesday, July 14, the U.S. Senate unanimously passed H.R. 3700 – the Housing Opportunity Modernization Act. The House of Representatives unanimously voted in favor of the bill in February. Now, it heads to the President’s desk for his signature.
What does this mean for home buyers and sellers? Owning a condo is about to get a little easier.
H.R. 3700 contained several key proposals for condo owners.
FHA Recertification Will Be Easier
Ever found a great condo in your price range right where you want to live but FHA financing wasn’t allowed? It happens more often than you realize and part of the problem has been how difficult certification – and recertification – for FHA has been for condominiums. H.R. 3700 makes this process easier which will mean that more great condos for sale should, eventually, be eligible for FHA loans.
Condo Owner-Occupancy Rates Are Lower
Living on the Emerald Coast like we do, we’re no stranger to vacationers buying second homes on the beach, especially condos. FHA has had a restriction that condos must have 50 perfect owner-occupancy rates to qualify for financing. Plenty of second home owners rent out their unit throughout the year until they’re ready to use it. This lowered the percentage of how many owners actually lived in a building or on a property. Now, the owner-occupancy rate will be lowered to 35 percent, making more locations eligible for FHA financing.
Eases Restrictive Transfer Fee Policy
The FHA has had a policy for a long time that says it won’t allow FHA mortgage insurance on any property with a transfer fee covenant. Unfortunately, this has left plenty of condos out of range for buyers with a FHA loan. The new law tasks the FHA with creating a new policy that will ease these restrictions and follow the current guidelines in place from the Federal Housing Finance Agency. Ultimately, more condos available for sale will be eligible for FHA financing with this change in policy.
What does all of this mean to you? Buyers who qualify for a FHA loan will have many more options while condo owners will have more potential buyers. This is good business for condo associations who may have been suffering from too many vacancies, too.
Prior to the passage of H.R. 3700, more than 140,000 Realtors from across the country contacted our Senators to urge them to pass this act. Thankfully, they listened.
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