FHA Relaxes Restrictions on Condo Associations

The FHA recently announced it was temporarily relaxing certain restrictions that were being imposed on condo associations that were negatively impacting buyers and sellers.

Among the restrictions being relaxed was one that was directly impacting buyers and sellers of existing homes and condos:

  • Changes to the delinquent home owners association assessments requirement.  Previously, units that were 30 days or more past due on their assessments were counted toward the maximum allowable percentage of units with delinquent assessments; now, only those that are 60 or more days past due will be counted.

This change will make it easier for buyers to obtain FHA-backed financing on existing units in a condo association. The previous restriction of including 30 day delinquent association dues in the FHA's allowable percentage was preventing buyers from obtaining this type of financing. This left buyers with only cash or conventional mortage options, which restricted many first-time homebuyers. It, of course, impacted those trying to sell their homes.

These changes are effective immediately, but are set to expire August 31, 2013, unless extended.

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