FHA Condo Regulations

FHA's minimum owner-occupancy ratio for condo associations is reduced from the current 50 percent to 35 percent. FHA is ordered to streamline the entire recertification process for condo associations and make compliance "substantially less burdensome".

The new law requires FHA to reduce its minimum owner-occupancy ratio from the current 50 percent to 35 percent, unless the FHA can provide justification for a higher percentage. Specifically, in order for a condominium project to be acceptable for FHA insurance, only 35 percent of all family units, including units not covered by FHA-insured mortgages, need be occupied by the owners as a principal residence or a secondary residence, as such terms are defined by the Secretary, or must have been sold to owners who intend to meet such occupancy requirement.

Additionally, FHA is required to streamline the entire recertification process for condo associations and make compliance "substantially less burdensome." The law requires FHA to consider, among other things, lengthening the time between certifications for approved properties, and allowing updating of information rather than resubmission. Condo experts predict this alone could convince significant numbers of associations to return to the FHA fold, thereby opening up sales and purchases to thousands more condo units.

This law also requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.

HR 3700 codified as 42 USC 1437. N.A.R. and C.A.R. backed.