Welcome home? New FHA process could make condos available to more buyers

Millions of homebuyers could benefit from new guidelines issued by the U.S. Department of Housing and Urban Development that streamline the Federal Housing Administration’s condominium project approval process. The guidelines, which went into effect yesterday, now allow single-unit approvals, extend the lifetime of approvals, simplify recertification, and more.

In a statement, HUD Secretary Ben Carson says one goal of the new process is “to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age in place.” HUD data shows condominium unit mortgages currently account for fewer than 2% of all FHA-insured mortgages. 

One important element in the agency’s updated approval guidelines includes single-unit approvals on up to 10% of mortgages in condominiums without FHA approval provided that they are financially stable. The other changes include increasing the concentration rate so that FHA can insure up to 75% of unit mortgages in a condo project and lowering owner occupancy rates from 50% to 35% based on financial and operational stability. 

In addition, the new procedures extend FHA approvals for condominiums from two years to three, simplify recertification to only requiring updates to information instead of resubmitting all information, and ease restrictions on mixed-use condominiums with up to 45% commercial space. 

HUD estimates that between 20,000–60,000 condominium units may now be eligible for FHA-insured financing annually, and that around 7,000 new condominium projects could be built thanks to wider availability of mortgages.

The new guidelines “take some of the pressure off boards” to spend association time and money to certify a condominium project for FHA financing, says Jeffrey A. Beaumont, vice chair of CAI’s California Legislative Action Committee and an attorney with Beaumont Tashjian in Woodland Hills.  

The changes should allow greater access to FHA financing and ultimately result in a greater pool of homes for prospective purchasers to choose from, says Beaumont, a fellow in CAI’s College of Community Association Lawyers. 

CAI supports the actions and has made a balanced, data-driven approval process a public policy priority. “Following the housing crisis in 2008, the FHA condominium approval process severely impacted access to FHA-insured mortgages, which hurt homeowners and household formation,” says Dawn M. Bauman, CAE, CAI’s senior vice president of government and public affairs. “The changes mark a return for FHA as a key long-term partner for condominium associations.” 

Credit-worthy first-time homebuyers who have been prevented from achieving condominium homeownership could now benefit from the new guidelines. About 40% of the nation’s 27 million community association households call a condominium home, accounting for approximately 10% of the nation’s housing stock, according to the Foundation for Community Association Research.  

>>Read more about the updated process at www.caionline.org/FHA.  

Pamela Babcock, a writer and editor in the New York City area, contributed to this article. 

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1Q 2019: Agency, Property Condition Disclosure, and RESPA

This edition of the quarterly report reviews recent case decisions and legislative activity from the first quarter of 2019 in the areas of agency, property condition disclosure, and RESPA. In addition, we review employment case decisions and legislative activity from April 2018 to April 2019.

LIVE from BPCon2019: Ask Us Anything!

All the BiggerPockets podcast hosts on stage in one place! 

This bonus episode was recorded at the BiggerPockets Conference 2019 on October 7th in front of a live audience of more than 1,000 people at the Gaylord Opryland Resort in Nashville, Tenn.

We turned the mics over to our members, who fired a bunch of great questions at Scott Trench and Mindy Jensen, Brandon Turner and David Greene, Joshua Dorkin, and J and Carol Scott.

Our panelists covered some nitty gritty real estate topics, like tackling vacancy and how to invest IRA funds, as well as big-picture concepts like motivation, marketing, and teaching family members the importance of investing at an early age.

Also, everyone reveals which animal they would be if they had to choose, and a member of the audience challenges David Greene to produce an analogy on the spot. Listen to find out whether he performed under pressure! 

Our first conference in seven years was a big success, and we’re so thankful to everyone who came out to learn, network, and have a great time.

Download this bonus episode, and be sure to subscribe to all three shows BiggerPockets Real Estate Podcast, BiggerPockets Money Podcast, and BiggerPockets Business Podcast so you won’t miss an episode.

BiggerPockets Podcast 351: Unlocking Greater Focus, Creativity, and Happiness Through “Stillness” with Ryan Holiday

Stop whatever you are doing and download this episode right now!

Today’s show is highly likely to change your life in ways you may not have even realized it needed changing! Brandon and David sit down for an amazing interview with Ryan Holiday, keynote speaker and bestselling author of Ego Is the Enemy, The Obstacle Is the Way, and Stillness Is the Key.

And Ryan does not disappoint! You will be blown away with his advice regarding how we talk ourselves into buying deals we know we shouldn’t, how he conducts cost/benefit analysis on different opportunities that come his way, and how he’s learned to avoid “success” when it will cost him more than it’s worth.

Ryan also shares some mind-blowing knowledge about why we make bad decisions; why working harder isn’t always better; and how to identify virtues or skills you are lacking in a given situation, so you can figure out the path to the result you want. In addition, he shares how he models himself after the best and brightest minds he knows, how he believes in the power of journaling, and how important it is to put your strongest energy into the pursuits that will yield the highest ROI.

This show is simply an incredible breakdown on human performance, goal setting/reaching, and using real estate to accomplish what really matters in life.

Download this one today and buckle your seat belt!

Common courtesy: How to promote civility in community associations

Contributed by Donna DiMaggio Berger, Esq.

Raised voices, reddened faces, and angry gestures. You might think you are watching a congressional hearing on C-SPAN, but you are at your community’s board meeting.

The erosion of civility in our society has begun to manifest itself in private residential communities. This comes in many forms—from rudeness and disruptive behavior at meetings to more dangerous and escalating actions.

While it is impossible to legislate civility, the proximity of a multifamily dwelling or a community with shared amenities heightens the impact of these behaviors and creates myriad legal issues and operational challenges for volunteer boards and their managers.

Perhaps the most difficult legal issue is the determination of when a lack of civility requires action in the form of regulation, enforcement or, in egregious circumstances, additional security measures.

Boards find the quality of life and the ability to conduct business diminished as limited time and resources are increasingly devoted to the personal interactions between residents and staff, instead of the operation of the community.

It is difficult to attract and retain good staff and contractors and, most importantly, no one will want to serve on the board or a committee.

Given the obligation of the association to protect the person and property of the residents, there is a point where regulatory and enforcement action is required.

  1. Run a businesslike meeting. The more organized and businesslike the board members are, the less opportunity for disruption.
  2. Have your board members set the standard for civility. Some communities even require board members to sign and adhere to a code of conduct to set the proper example and tone for the community. Most associations have bylaws that are decades old. In the last few years, I have updated countless sets of documents to provide operational and communication standards for directors and owners.
  3. Adopt and enforce board rules regarding the manner in which residents treat each other, the staff, and the contractors on the property. While this is subjective, most of us recognize truly unacceptable behavior when we see it.
  4. Operate with transparency and solicit input from the community. Some communities fracture because of a sense of secrecy and some fracture because of generational differences in the approach to maintenance and improvement of facilities. It is unlikely that every owner will agree that certain projects are necessary or that reserves should be fully funded yearly, but boards are elected to make tough decisions, not just popular ones.

Boards that address these issues and send a message that uncivil behavior is not tolerated will do a service to their communities.

Unlike that hearing on C-SPAN that you can turn off, discord in a community association cannot be stopped at your front door. Community association residents should realize that “living together” requires a level of civility and respect that we hope will flow upward at some point.

Is your community struggling with civility? What solutions have you tried? Comment below.

Donna DiMaggio Berger is a board-certified specialist in condominium and planned development law, a shareholder with the law firm of Becker, and serves as the executive director of the Community Association Leadership Lobby in Florida. She is also a fellow in CAI’s College of Community Association Lawyers. Article originally appeared on Sun-Sentinel.com and is reprinted with author’s permission.

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