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Revised FHA Condo Guidelines Pose New Challenges

7/2/2011  -  Falls Church, VA

Community Associations Institute (CAI) is raising concerns about condominium financing guidelines published June 30 by the Federal Housing Administration (FHA).

While the new guidance shows some progress on issues critical to condominium communities, homeowners and prospective buyers, CAI says it poses a host of new challenges, including issues involving homeowner delinquency criteria, deed-based transfer fees and pre-loan community certifications.

The latest guidance—another step in efforts to address the mortgage lending crisis—was issued to provide greater clarity on the condominium-approval process for FHA-approved mortgages.

“We’ve criticized FHA in the past for adopting unrealistic criteria,” says Andrew Fortin, CAI’s vice president of government and public affairs. “Although the new guidance offers some good news for condominium associations, several provisions open a host of troubling issues that must be addressed.”

Fortin says FHA did respond to CAI’s recommendations on issues related to assessment delinquencies, commercial space, affordable housing and rental restrictions.  He adds that FHA will allow Housing and Urban Development (HUD) Home Ownership Centers (HOCs) greater flexibility to approve projects that do not meet specific requirements under the guidelines.

“That’s positive news, and we applaud FHA for being responsive to concerns we’ve raised in the past,” Fortin says.  “Unfortunately, serious issues remain. We need to get this right, not just for the millions of Americans who make their homes in condominium communities, but also for potential homebuyers. If we don’t make the right decisions now, the housing market—and home values—could suffer in the years ahead.”

CAI supports efforts to ensure that FHA and other mortgage programs are based on sound underwriting criteria.

Adds CAI Chief Executive Officer Tom Skiba, CAE: “We believe all federal agencies, including FHA, have an obligation to seek public input and provide prior notice and comment to changes to any federal program with financial impact on the marketplace.  FHA has taken a step in the right direction. We hope this spirit of collaboration continues.”

CAI is working in both legislative and regulatory venues toward three essential goals:

  • Ensuring that Americans can obtain mortgages for homes in community associations.
  • Preserving the ability of community association homeowners to sell their homes.
  • Safeguarding the financial well-being of homeowners and condominium associations.

See Some Progress, More Problems for more details on FDA’s new guidelines. Learn more about the scope of CAI’s Mortgage Matters initiative.
CAI is a 30,000-member association dedicated to building better communities. Working in partnership with 59 domestic chapters, one international chapter and housing leaders in other nations, CAI provides information, education and resources to associations and the professionals who support them. Our mission is to inspire professionalism, effective leadership and responsible citizenship, ideals reflected in communities that are preferred places to call home. Visit or call (888) 224-4321.


Phone: 703-970-9235