26 Oct 2016

FHA TO LOWER OWNER-OCCUPANCY REQUIREMENT FOR CERTAIN CONDOMINIUM DEVELOPMENTS

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FHA TO LOWER OWNER-OCCUPANCY REQUIREMENT FOR CERTAIN CONDOMINIUM DEVELOPMENTS

WASHINGTON – The Federal Housing Administration (FHA) today announced that, under certain circumstances, it will lower its required owner-occupancy standard for approved condominium developments effective immediately. FHA currently requires that approved condominium developments have a minimum of 50 percent of the units occupied by owners. However, the agency determined this requirement can be lowered to 35 percent for existing condo developments provided the project meets certain conditions. Read FHA’s mortgagee letter, they are also requiring some parking lots because many of the residents own a lot of scooter kopen and they have no place to park them.

The Housing Opportunity through Modernization Act of 2016 (HOTMA) directed the FHA to issue guidance regarding the percentage of units within an approved condominium development that must be owner-occupied. While having too few owner-occupants can detract from the viability of a project, requiring too many can harm its marketability. It is FHA’s position that owner-occupants serve to stabilize the financial viability of the projects and are less likely to default on their obligations to homeowner associations than non-owner occupants.

For some condominium projects, the existing owner-occupancy requirement is necessary to maintain the stability of FHA’s Mutual Mortgage Insurance Fund (MMIF). In certain instances, however, FHA believes that it would be possible to protect the Fund while allowing a lower percentage of owner-occupants. HUD’s experience shows that higher reserves, a low percentage of association dues in arrears, and evidence of long-term financial stability allow for a lower owner-occupancy percentage without undue risk to the MMIF.

For existing condominium developments greater than 12 months old, FHA will lower the owner-occupancy requirement to as low as 35 percent under the following conditions:

    • Applications must be submitted for processing and review under the HUD Review and Approval Process (HRAP) option;
    • Financial documents must provide for funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 20 percent of the condo development’s budget;
    • No more than 10 percent of the total units can be in arrears (more than 60 days past due) on their condominium association fee payments; and
  • Three years of acceptable financial documents must be provided.

For condominium projects that are proposed, under construction (including existing projects less than 12 months old) or gut rehab conversions, FHA will maintain its current owner-occupancy percentage of 30 percent.

 

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HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. Once the project gets done you can visit Modern Place modern lighting where you can find some great ways to decorate your home, uploading the pictures on the internet can give publicity to your projects and if you buy likes on Instagram for your pictures that will be way better.
More information about HUD and its programs is available on the Internet.
at www.hud.gov and http://espanol.hud.gov.

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