Daily Real Estate News | Wednesday, September 28, 2016
Yesterday, HUD released its proposed rules on H.R. 3700, or the “Housing Opportunity Through Modernization Act.” But the rules punt, at least temporarily, on a provision in the law that lowers the allowable owner-occupancy ratio for FHA-approved projects to 35 percent from the current 50 percent. NAR warns this action will make for a missed chance to improve the availability of FHA condo financing by deferring its decision to implement new limits enacted into law this summer.
NAR President Tom Salomone, in a statement he released yesterday, says lawmakers made their intentions clear with the 35-percent maximum limit included in the legislation. “HUD has the authority right now to set the owner-occupancy requirement at 35 percent while the regulatory process moves forward, “ Salomone said. “We would urge them to consider that option rather than defer the decision for an indeterminate amount of time.”
NAR supported H.R. 3700 because it takes a number of long-sought steps to make it easier for households to get FHA insured financing on condo purchases. Among other things, the law lets boards certify their condo projects for three rather than two years, and it gives HUD flexibility to allow projects to have more commercial space generic xenical. It also lets lenders make so-called “spot loans” for households buying a unit in a project not approved for FHA financing. That’s something NAR supports even though it was added in by HUD and not included in the law. NAR supports the lower limit because it solves a long-standing roadblock to wider use of FHA condo financing, which right now only makes up about 10 percent of all condo loans. Under the law, the 35 percent limit takes effect automatically after 90 days of enactment unless HUD issues rules implementing something different during that time. Under yesterday’s proposed rules, HUD is inviting input on setting the limit at somewhere between 25 and 75 percent owner-occupancy.
The proposed rules also invite input on the maximum allowable amount of commercial space for these properties, which is set at 50 percent in the law. HUD is now looking at a range between 25 and 60 percent.
The law was enacted on July 29, so the 90-day rule-writing period closes at the end of October. “This is by no means the end of the road,” Salomone said. “HUD has asked for comment and REALTOR® will certainly make their concerns heard.”
—Rob Freedman, REALTOR® Magazine