On Monday, the Federal Housing Administration started limiting the number of buyers in condo buildings that can get loans insured by the agency.
The rules put restrictions on buildings with poor finances, too many delinquent owners and a high number of rentals. One change is that no more than 15 percent of total units can be more than 30 days behind on condo association fees. Another is a requirement that 50 percent of a condominium be owner-occupied.
These tighter lending standards are designed to protect the financial health of the FHA. Roughly 18 percent of loans currently insured by the FHA are delinquent or in foreclosure. The agency’s financial cushion is below the federal minimum.
The FHA, a key source of mortgage financing, insures roughly one in four new loans. Primarily because buyers need only a 3.5 percent down payment.
Prices in qualifying condos will probably go up while “unqualified” units won’t sell at all. The move will be a blow to many Palm Coast condo owners who are trying to sell their units. And a boon to people with money who want to make a smart, long-term real estate investment.
This runs counter to political initiatives that encourage first time home buyers and other “economically disadvantaged” to buy a home.
Overall, poor folks and real estate agents like me will suck wind….government greenhouse gas.
I wish I knew which of our Palm Coast condos had “poor finances and/or a high number of rentals". Canopy Walk? I will keep tuned in to Toby Tobin’s newsletter at http://gotoby.com/ to see if he gets info about where and how this new, restrictive lending policy is affecting Palm Coast’s emergence from the real estate slump.
But the Rich Can Get Richer using the FHA Section 203k program to purchase ‘dream homes’. More and more distressed properties are hitting the market and mortgage lenders increasingly offer FHA Section 203k mortgages. These loans finance both home purchases and residential improvements, allowing buyers to purchase dwellings with possibilities and transform them into dream homes. In many instances, homes are in prime locales but need some work; and experts say the 203k mortgage program lets average buyers snap them up. I'm a Buyers' Agent! Let me find one for you!
