CAI has been working to ensure that residents of condominiums have access to fair and affordable mortgages through our engagement with the Federal Housing Administration (FHA). Traditionally, FHA has only played a minor role in mortgage for condominiums; however, that changed with the housing crisis and today, FHA accounts for up to 30% of all condominium mortgages, through FHA’s condominium mortgage insurance program. Beginning in late 2008, FHA has issued regulatory guidance to set standards condominium associations must meet in order for a purchaser to qualify for FHA financing. CAI believes that FHA has set arbitrary standards which do not adequately measure the financial health of condominium associations. In addition to the criteria issued by FHA, CAI also has requested that FHA engage in public notice and comment by stakeholders prior to implementing any new guidance on condominiums. Below is a record of actions taken by CAI in response to what we believe is FHA’s mismanagement of its condominium insurance program.
Mortgage Matters FHA FAQ
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CAI Leads Industry Letter to FHA on Transfer Fees (5/2012) On May 2nd, CAI urged the Federal Housing Administration (FHA) to avoid creating a second, conflicting national standard governing community association transfer fees.
In 2010, FHA established a policy that all transfer fees violate its program rules and guidelines. This decision, which was taken without any examination of long-standing legal principles or understanding of market impact, has not been uniformly enforced. Read more…
FHA Action on Condos, Transfer Fees in Pipeline (4/2012) The Federal Housing Administration (FHA) is likely to take action in the coming months that will affect community associations. FHA is preparing new policies for condominium project approvals and will soon release guidelines on the use of transfer fees by community associations. Read more...
CAI Files Comments on FHA Seller Contributions Rule (4/2012) CAI has submitted comments on a proposal by the Federal Housing Administration to limit seller contributions at FHA mortgage closings. In February, FHA proposed to limit the total dollar amount of seller contributions for FHA loans to a maximum of three percent of the loan amount. FHA also proposed to prohibit sellers from offering to pay any amount of association assessments for buyers. Read more…
White House Announces FHA Refinance Program Changes (3/2012) President Obama has announced changes to the Federal Housing Administration’s streamline refinance program to help more borrowers take advantage of historically low mortgage interest rates. FHA’s streamline refinance program allows existing FHA borrowers to forgo strict loan underwriting requirements when refinancing to another FHA-insured mortgage. Read more…
HUD Files Rule Banning Seller Payment of Assessments at Closing (2/2012) The U.S. Department of Housing and Urban Development has acted to ban the practice of sellers agreeing to pay a set amount of association assessments for a buyer when closing on a FHA-insured mortgage. The ban is included in a proposed rule limiting concessions sellers may offer buyers to complete a sale. Read more...
House Subcommittee Moves FHA Legislation (2/2012) On February 7th, the House Financial Services Subcommittee on Insurance and Housing approved the FHA Emergency Fiscal Solvency Act of 2012. According to subcommittee chairwoman Rep. Judy Biggert (R-IL), the legislation could be taken up by the full House Financial Services Committee later this month. Read more…
Congress to Increase Fees on Fannie Mae, Freddie Mac, and FHA (12/2011) The Congress has opted to increase fees for Fannie Mae, Freddie Mac and FHA to pay for a reduction in the payroll tax. As part of an economic stimulation package, the Obama Administration ushered in a reduction in employee payroll taxes. The temporary reduction is set to expire on December 31st unless Congress votes to approve an extension. Read More...
FHA Responds to CAI on Transfer Fees (11/2011)
In October, CAI called on the Federal Housing Administration (FHA) to take action and address the issue of deed-based transfer fees in community associations. Early this year FHA issued an “interpretation” of its regulations which concluded that it cannot underwrite mortgages in community associations with deed-based transfer fees, which exist in close to half of all community associations. CAI called on FHA to address the issue through a waiver or other regulatory means. You can read the October letter here.
On November 23, 2011, FHA responded. In a short letter FHA indicated it recognizes such fees have value to homeowners and community associations and it was working to take action in the coming months to address the issue. CAI will continue to pressure FHA to take quick action on this matter. You can read the response from FHA here.
CAI Delegation Meets with FHA Head (11/2011)
On November 17, 2011, CAI led a delegation to meet with Carol Galante, the Acting Commissioner of the Federal Housing Administration (FHA). The delegation included representatives from the National Association of Realtors and the National Association of Home Builders. The purpose of the meeting was to discuss ongoing concerns with the FHA condominium guidelines. The meeting was a follow up to CAI’s July 25 and October 12 letters expressing concerns on new criteria found in FHA’s Mortgagee Letter 2011-22. Read more...
Leading Senator Chides FHA on Condos (11/2011)
Massachusetts Senator Scott Brown has sent a strongly worded letter to the Secretary of Housing and Urban Development expressing concerns over the development and implementation of FHA’s condominium guidelines. The letter specifically addressed the concern over the recent actions by FHA to deny mortgage funding to associations with special assessments or loans for property improvements. Read More...
Key Congressmen Express Concern with FHA Criteria, Process (11/2011)
Condominium owners struggling to meet stringent and conflicting Federal Housing Administration (FHA) underwriting requirements got a helping hand in their efforts from key members of Congress. Members of the Massachusetts Congressional Delegation, led by Congressmen Barney Frank, Michael Capuano and Stephen Lynch, sent a letter expressing their concerns with the current FHA condominium underwriting criteria and the lack of stakeholder input in the development of the guidelines. Read More…
New FHA Condo Rules Cutting Owners' Loan Options (10/2011)
Condo industry leaders, from the 30,000-member Community Associations Institute to individual unit owners and realty agents, say a series of rule revisions by the Federal Housing Administration has caused thousands of condo projects to become ineligible for FHA mortgages. This, in turn, has abruptly shut off loan money for condo buyers and refinancers, forcing them to pursue conventional bank loans requiring much higher down payments. Read more…
CAI Cautions FHA on Transfer Fees, Calls for Waiver (10/2011)
As part of a series of training sessions on the revised, Federal Housing Administration’s (FHA) condominium mortgage guidelines, FHA informally announced that it would be issuing new regulatory guidance to address the issue of deed-based transfer fees. FHA indicated that it would likely disqualify any condominium association with deed-based transfer fees from access to FHA-insured mortgages. This news comes as condominium associations across America are still reeling from the July 2011 FHA Guidance which imposed new and confusing underwriting guidelines that conflict with condominium business practices, state law and common sense. In response to this sudden announcement by FHA, CAI has dispatched a letter warning FHA of the dire consequences to the condominium market if it follows through on its announcement. Read more...
FHA Backs Away From Management Company Insurance Mandate (9/2011)
Thanks to pressure from CAI members across the country, the Federal Housing Administration (FHA) indicated that it will revise a controversial regulatory mandate that would require management companies to carry a fidelity bond if they managed a condominium association. In June, FHA released new guidelines for its condominium mortgage insurance program. The guidelines set standards that condominium associations must meet in order for any potential buyer to qualify for a FHA-backed mortgage. As FHA accounts for nearly one in three condominium mortgages, the guidelines have a significant impact on the marketability of condominiums. Read More...
CAI Engages House Committee on FHA Condo Program 9/2011)
The House Financial Services Committee’s Subcommittee on Insurance, Housing and Community Opportunity hosted a hearing on September 8 examining the role of FHA in the mortgage markets. Acting FHA Commissioner Carol Galante testified to FHA’s role in the post crash housing market and noted progress made by FHA in ‘improving’ the condominium insurance process. Her testimony stands in sharp contrast to the statement submitted to the subcommittee by CAI. Read more…
CAI Mortgage Teams Deliver a Message to Congress (8/2011)
In July, CAI set a goal of working with state LACs to target 40 members of the House Financial Services Committee and the Senate Banking Committee. LAC appointed “Mortgage Matters Teams” were empowered to set up visits with targeted members to discuss three key issues, FHA condominium underwriting standards, Qualified Mortgage Rules and Qualified Residential Mortgage Rules. All of these federal proposals have the potential to have a substantial negative impact on access to affordable and fair mortgages for residents in Community Associations. So far state LACs have met with close to half of the targeted members during the month of August! Read more...
CAI – OC Meets with Local Congressman to Discuss Mortgage Situation Impact on Community Associations (8/2011)
Earlier this week, several members of the CAI-OC Chapter met with the local representative, US Congressman John Campbell. They spoke with the Congressman about the unique impact on community associations of the mortgage situation. Earlier this week, several members of the CAI-OC Chapter
met with the local representative, US Congressman John Campbell. They spoke with the Congressman about the unique impact on community associations of the mortgage situation. Read More...
CAI Provides Feedback to FHA on Condo Guidance (7/2011)
CAI has provided its direct feedback to FHA expressing concerns and recommendations on Mortgagee Letter 2011-22. In a 13 page letter, CAI expressing ongoing concern over the lack of transparency by FHA in the development of guidelines for the condominium program and highlighted how that lack of transparency is creating unnecessary problems for the condominium market. The letter highlights CAI’s concerns on existing criteria used by FHA and new provisions included in the June 30 guidance letter. You can read CAI’s letter here.
CAI Files Administrative Challenge to FHA Guidance (7/2011)
On Friday, July 22, 2011, CAI filed a challenge to provisions of the FHA Mortgage Insurance Guidance with the Office of Information and Regulatory Affairs. CAI’s letter asserts that FHA failed to perform neither the necessary due diligence nor appropriate research prior to issuing Mortgagee Letter 2011-22. Under federal policy embodied in Executive Order 12866, federal agencies are required to meet procedural and substantive requirements prior to issuing regulations. CAI challenged the FHA guidance in four areas: the fidelity insurance mandate for management companies, the 30 day delinquency standard, project certification requirements and provisions related to deed restrictions. Read More...
CAI’s Federal Work – Making Headlines (7/2011)
CAI’s work on federal issues involving mortgages and FHA condominium underwriting are making headlines. After the release of new guidance on June 30, 2011, CAI’s strong critique is helping shape news coverage across the country. Features are currently being run by AP, USA Today, Reserve Mortgage Daily and Columbus Dispatch. Read them at the links below:
FHA’s New Rules: More Pain for the Condo Market
FHA Condo Changes: More Questions Than Answers
Neighbor vs. neighbor as homeowner fights get ugly
Federal rules no boost to condominium industry
Updated FAQ on new FHA Condo Guidelines (7/2011)
The G&PA department has developed an updated FHA FAQ that reflects the new guidance issued by FHA on June 30, 2011. Under the new eligibility criteria, FHA has provided some flexibility on issues such as delinquencies, owner occupancy requirements, commercial space and rental restrictions based on recommendations made by CAI. FHA has also imposed new requirements on fidelity insurance, deed restrictions, and project certifications. The FAQ provides an overview of the information and criteria the FHA will be using for qualifying condominium associations for FHA approved lending. To read the updated FAQ click here...
FHA’s New Condo Guidance: Some Progress, More Problems (7/2011)
An initial review of the new Federal Housing Administration’s (FHA) Condominium Project Guidelines shows some progress on issues critical to Community Associations Institute (CAI) members, but raises a host of new challenges for condominium associations. The new guidance was issued to provide greater clarity and flexibility to the condominium approval process for FHA mortgages, a process which CAI has criticized for adopting unrealistic criteria and not engaging key stakeholders in the development of program guidelines. The new guidance does offer some good news for condominium associations on some problematic areas of FHA’s original guidance. At the same time new provisions in the guidance open a host of new and troubling issues for condominium associations and the companies that support them. Read More...
FHA Issues New Condo Program Guidance (7/2011)
On June 30, 2011, the FHA issued a new guidance for its condominium mortgage insurance program. The guidance, found in Mortgagee Letter 2011-22 updates existing rules for underwriting of FHA mortgages in condominium associations. A first look at the new Mortgagee Letter reveals that FHA has responded to some of the criticisms of CAI that the guidance was too inflexible and contained unrealistic criteria on rental restrictions, assessment delinquencies, commercial space, affordable housing provisions and other matters that CAI has repeatedly raised with FHA officials. The new Mortgagee Letter does provide greater flexibility for condominium associations on matters such as assessments. CAI is working on a full analysis, but you can view the full text of the FHA documents on this matter at the links below:
FHA Mortgagee Letter Announcement
FHA Mortgagee Letter/Guide
FHA Summary Chart
CAI Delegation Meets with FHA Head (6/2011)
The Community Associations Institute (CAI) and our colleagues at the National Association of Realtors and the National Association of Home Builders and the Institute for Real Estate Management met with Bob Ryan, the acting Commissioner of the Federal Housing Administration (FHA) on Monday, June 13, 2011. CAI’s delegation was led by current Board President Steven Brumfield and included staff members Andrew S. Fortin, VP of Government Affairs and C. Scott Canady, CAI’s federal affairs consultant. Read More...
CAI Unites with Housing Allies to Push FHA on Condo Rules (5/2011)
On May 6, 2011, the Community Associations Institute (CAI), the Institute for Real Estate Management, the National Association of Home Builders and the National Association of Realtors united in calling for greater transparency and opportunity for public input into the development of Federal Housing Administration (FHA) lending rules for condominiums. In addition to calling for greater public input, the group united in specific recommendations on key elements of the FHA Condominium Insurance Program. Read More...
CAI Releases Survey on FHA Condominium Approvals (5/2011)
A report issued by the Community Associations Institute (CAI), shows that condominium associations are struggling to meet lending requirements set by the Federal Housing Administration in the wake of the housing crisis, leaving many condo associations without access to affordable financing. According to a survey of its members, close to half of all condo associations report that they are unable to qualify for FHA financing. FHA insured mortgages currently account for more than one in three condominium purchases. Read More...
CAI Makes Progress with FHA on insuring condominium units in projects with Affordable Units (4/2011)
In January of 2011, CAI met with representatives of FHA to discuss issues with FHA's new requirements. Among the issues discussed were leasing restrictions which was resolved successfully a few weeks ago by FHA issuing a blanket waiver on such restrictions permitting those projects to be approved. Another issue was with affordable units in condominium complexes. FHA's position in January was that if the deed rider to the affordable unit deeds provided that the foreclosure of the loan did not extinguish the affordability restriction, FHA would not insure any loans in the community-market rate or affordable units. Read More...
FHA Issues Waiver on Leasing Restrictions (3/2011)
Leasing restrictions have been one area of the FHA condominium guidelines that has caused problems for associations seeking to get FHA approvals. CAI has brought this issue to FHA’s attention and has petitioned FHA to review these criteria. On March 18, 2011, FHA issued a waiver that will provide greater flexibility on leasing restrictions under the FHA condominium insurance program. This means that many condominium associations whose FHA approval was rejected due to rental restrictions may now qualify under the FHA waiver. Read More...
CAI Calls on FHA for Stakeholder Input, Transparency in Condo Guidelines (3/2011)
CAI has reached out to the leadership of FHA to express concern over continued problems and mismanagement of the condominium insurance program. The program requires condo associations to get FHA approval for the entire association in order for any buyer to qualify for FHA financing to purchase a condominium unit. As FHA’s share of condominium mortgages has exploded during the housing crisis from less than 5% to 30% of all mortgages, sound underwriting guidelines and administration are critical to ensure appropriate qualification criteria are adopted. To date, FHA has continued to issue guidance with no public notice or stakeholder input. The result is an increasingly troubled program that is needlessly disqualifying healthy condominium associations and burdening homeowners with added compliance costs.
Read More...
CAI Members Meet with FHA to Discuss Condominiums (1/2011)
On January 7th, a delegation of CAI members met with policymakers at the Federal Housing Administration (FHA), presenting the agency with practical difficulties condominium associations face when qualifying for FHA’s condominium mortgage insurance program. CAI’s member delegation focused on three problem areas that are preventing homeowners in many condominium associations from using FHA programs. Read More...
FHA Announces Delay in Condominium Project Approval Expiration Deadlines (12/2010)
FHA has announced a revised schedule for condominium project approval expirations and urged all condominium communities wishing to retain FHA approval to complete the recertification process. CAI strongly encourages all condominium communities with FHA approval to be mindful of the new expiration deadlines and to begin the recertification process in a timely fashion to avoid disruption in the sale of units. Read more...
FHA Condominium Project Approval Recertification (Update) (11/2010)
Continuing its implementation of the new condominium project approval process, the Federal Housing Administration (FHA) has released guidance for condominiums seeking project recertification. To review FHA documentation on project recertification and to verify required information for recertification, please click here. To view general information on FHA’s condominium program, click here. To view CAI’s FAQ on the recertification process, Read more...
CAI FAQ on FHA Condo Approval Recertification:(8/2010)
Continuing its implementation of the new condominium project approval process, the Federal Housing Administration (FHA) has released guidance for condominiums seeking project recertification. Read more ...
CAI Seeks Additional Revisions of FHA Condo Guidelines (5/2010)
As the federal government props up the finances of mortgage giant Fannie Mae and struggles to restructure the nation’s mortgage finance system, federal agencies are also re-examining their criteria for mortgages within condominium associations. Recently, the Federal Housing Administration (FHA) has indicated that it may revisit its most recent set of requirements for financing purchases within condominium associations. Read more ...
FHA Condominium Guidelines - FAQ For Associations(11/2009)
The FHA has released its latest regulations dealing with FHA insured condominium mortgages. Although these regulations deal primarily with requirements FHA is seeking from lenders, they do affect your association. CAI has prepared this FAQ to help you understand what it means for your condominium association. Read more ...
CAI Expresses Continued Concern on FHA Rules (12/2009)
On November 6, the Federal Housing Administration issued revised guidelines outlining requirements for condominium associations to qualify for FHA mortgage insurance. With mortgage underwriting giants Fannie Mae and Freddie Mac still struggling in receivership, FHA mortgage insurance is playing an increasingly important role in providing financing options to condominium buyers. Because of this increasingly important role, CAI has been actively engaged with the FHA in response to their evolving guidelines for condominiums to ensure that the final requirements are realistic, achievable and are informed by real-world association experience. Read more ...
FHA Issues Revised Guidance in Condo Loan Approvals (11/2009)
On Friday, November 6, 2009, the Federal Housing Administration (FHA) issued two documents related to FHA mortgage insurance requirements for condominium associations. These two documents: HUD Mortgagee Letter 2009-46A and Mortgagee Letter 2009-46B provide an overview of the FHA-proposed transitional criteria and successor criteria for condominium association requirements for FHA mortgage insurance.
These letters replace earlier proposals issued by FHA that triggered a strong response from affected industries. CAI provided FHA with its feedback on the earlier drafts of the criteria. The new transitional criteria and the successor criteria found in these documents demonstrate a positive movement by FHA in areas in which CAI provided comments, but will continue to pose a challenge for condominium associations. Read more ...
FHA Delays New Condominium Requirements (10/09)
The FHA has announced that it will again delay the implementation of the new regulations governing condominium mortgage insurance until December 7th, 2009. The new regulations were initially proposed in June and would change the approval process and the criteria used to determine if a mortgage for a unit in a condominium association qualifies for FHA mortgage insurance. Read more …
FHA Condo Insurance Regs Delayed --- But Still Flawed (9/09)
The Federal Housing Administration (FHA) still plans to implement new regulations changing the approval process for a condominium to be eligible for FHA mortgage insurance. Originally scheduled to be implemented on October 1, the new regulations are now slated to take effect November 2, 2009.
As proposed, the spot approval process would be replaced by a comprehensive approval process that expires every two years. CAI believes the new regulations would be a serious burden for condominium associations, and lead to market confusion that could hinder the housing and economic recovery. CAI has formed a working group of industry experts to identify specific areas of the regulations that need to be changed, and to prepare a policy position and supporting data to advocate the changes that are needed to make these regulations an effective tool for the housing market. Read more ...