Potential Law to Affect Condo Financing

The Housing Opportunity Through Modernization Act, H.R. 3700, is a bill that was recently passed by Congress that changes the way condos are financed. The bill will now move to the Senate for approval, and if it becomes a law, it will allow consumers to finance condos where the owner occupancy ratio may be as low as 35%. Standard practice now prevents mortgage lenders to allow for financing in condos where the owner occupancy is less than 50%, among other criteria. If this bill is passed, it will just mean that a TON of condos in the Houston area that were previously only available to cash buyers/investors will now also be available to a buyer with an FHA loan.

In summary, the legislation solves a number of concerns regarding FHA’s condo rules: 

• Reduces owner occupancy ratio to 35%.
• Directs FHA to streamline condo certification process.
• Provides more flexibility for mixed use buildings.
• Mirrors FHFA rules regarding private transfer fees.

The legislation provides permanent authority for direct endorsement for approved lenders to approve Rural Housing Service loans. The legislation also makes reforms to streamline federally assisted rental housing programs.

Condo purchases are ideal for students or parents wanting to assist their college bound children, or even for empty nesters downsizing from their suburban abodes. Feel free to contact me about more information on condos in the Greater Houston area.