Condos have been caught in the middle for the past two years due to regulations from FHA loans that conflict with the existing rules and regulations of most condo boards. But Inman News reports that the quagmire may ease up soon since the announcement last week by FHA that they’ve come up with a ‘workaround’. One of the main points of contention was the common regulation that properties in foreclosure could be rented out by the mortgage investor on a short term, almost hotel-like, basis. Such a rule was rarely enforced and has been on the books for decades, but the FHA had initially required it be erased in order to stay within the rules. Condo associations would have to rack up sizeable legal fees to make that happen, which forced them to choose between maintaining eligibility for FHA loans on their units or going through the legal hoops to amend the regulations. But now the FHA will allow condo boards to bypass that if they and unit buyers give written statements that they, “will not rent the … unit for less than 30 days and/or provide any services normally associated with a hotel…”
Given how many condo properties are within the MRIS boundaries this will make an impact on the local market, hopefully for the better.
Have you had clients impacted by these FHA rules? Do you see this workaround as an improvement? Please let us know in the comments.