NAR CFA: Help Pass Bill H.R. 3700
Take action now to urge your Senators to pass H.R. 3700. The “Housing Opportunity Through Modernization Act of 2016,” makes needed reforms to the Federal Housing Administration (FHA) condominium loan program, federal assisted housing programs and Rural Housing Service loan programs. Simply, this bill makes buying a condo A LOT easier by expanding opportunities for first time home buyers and streamlining rural housing programs for low income rental residents. The House of Representatives passed this bill unanimously with a bipartisan vote of 427-0 and now we need the Senate to act!
What is the fundamental issue?
While the Federal Housing Administration (FHA) has loosened its condominium approval requirements in recent years, many properties continue to struggle to meet overly stringent criteria and the majority of properties are being denied.
What does this mean for your business?
Buyers and sellers of condominiums may find the property is ineligible for FHA financing, restricting the pool of buyers for that property.
NAR Policy:
Condominiums continue to be the most affordable homeownership option for many first time buyers, small families, single people, and older Americans. NAR believes that loosening FHA’s condominium rules will ensure that more homeowners will be able to sell their units, and homebuyers will have more opportunities to buy affordable properties. Furthermore, FHA promotes high density, urban living in many of their Smart Growth initiatives; easing condo restrictions should be part of this effort.
Opposition Arguments:
Opponents of NAR policy believe that condominium properties are more inherently risky than other residential real estate, and that the federal government should not be involved in that market. They also believe that condo properties that include rental units are even more risky because the renters don’t have the investment and may not treat the property as well as owners. Therefore, they think FHA’s restriction on the number of rental units reduces the risk.
Legislative/Regulatory Status/Outlook:
In February, the House of Representatives passed H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015”, introduced by Reps. Luetkemeyer (R-MO) and Cleaver (D-MO), by a unanimous vote of 427-0! This legislation will provide 4 changes to FHA's current condo policy. H.R. 3700 will: 1) reduce owner-occupancy ratio to 35% unless HUD acts within 90 days of enactment of this law to otherwise lower the ratio; 2) allow lenders to approve condos with commercial space over 25%; 3) require HUD Secretary to “substantially reduce” burdens on condo recertification; and 4) require FHA to mirror the FHFA rules related to private transfer fees. NAR is now working with the Senate to move legislation there.
