CAI assists in getting the FHA to ease requirements for condos to qualify for FHA Approval

Condominium Associations Rules and Regulations

The FHA has required condominium associations to get on a approved list before they can qualify for the FHA lending. However, many condo complexes are facing difficulty getting it approved since there is a limit on the percentage of rentals that can be in that community. What compounds the issue is that more people will rent their condominium to help make the payments, so it inevitably becomes a downward spiral.
CAI (Community Association Institute) a trade association for community association composed of association management firms, homeowner association board members, and vendors brought this lack of transparency and difficulty that many condos were facing to qualify.
As noted in the CAI press release:

  • “The FHA waiver will be effective for one year and will apply to leasing restrictions where the condominium project’s declaration, covenants, master deed, bylaws, or other pertinent documents contain provisions that restrict a unit owner’s ability to lease their unit. FHA has announced that the waiver will apply to the following types of rental restrictions requirements:
  • That all leases be in writing and subject to the declaration and bylaws of the condominium project.
  • That the condominium association receives a copy of the sublease or rental agreement.
  • That the condominium may not require a prospective tenant be approved by the association, including, but not limited to, meeting creditworthy standards.
  • That the association may request the names of all tenants, including the tenants’ family members.
  • That unit owners are prohibited from leasing their units for less than 30 days.
  • That associations may establish maximum lease terms (e.g., no more than 6 months, 12 months, etc).
  • A limit imposed by the association on the total number of rental units allowed, provided the percentage of rentals do not exceed the current FHA owner occupancy requirement of at least 50 percent owner occupied units.

Prior to the waiver, many associations were disqualified from FHA financing due to rental restrictions”
This waiver is only in place for one year at the current time, and it is set to expire on March 18, 2012. Hopefully, CAI will be able to continue making the FHA aware of the plights of the Associations whose owners cannot sell their condominiums due to increasing populations of renters.  People cannot sell to homeowners if homeowners are afraid that they will not be able to sell the property as easily due to the lack of FHA financing, which is increasing accounting for many loans.
This article is provided by Ashoka Lion.