Condo Media - December 2019 - 29

Game Changer
T

he Federal Housing Administration (FHA) has approved
a final rule easing access to FHA-insured mortgages for
condominiums, incorporating many of the changes for
which the Community Associations Institute (CAI) has been
lobbying for years. The policy changes could result in the
financing of an additional 60,000 condominium loans every
year, according to HUD estimates.
Among the key changes, the revised rule:
Reinstates the "spot approval" process. FHA will now
insure loans on up to 10% of the units in condominium
developments that have not been certified by the
agency. CAI terms this "a game changer," because many
smaller condominium projects have found the certification process too costly and too cumbersome. HUD estimates that of the approximately 150,000 condominium
developments in the country, only 6.5% are approved for
FHA financing.
Requires recertification every three years
instead of every two.
Eases restrictions on commercial space.
Lowers owner-occupancy requirements
from 50% to 30% of units.
Increases the cap on FHA-insured units to
75% of the units in a condominium community.
"A balanced, data-driven condominium approval process
at FHA has been a long-term public policy priority for
CAI," Dawn Bauman, senior vice president for government
affairs, said in a statement. The new rule, she added,
"marks a return for FHA as a key long-term partner for
condominium associations."
CAI focuses on state-level and federal legislative
initiatives, and three current issues have attracted the
association's concern: single-family rentals, licensing,
and construction defects.
SINGLE-FAMILY RENTALS
Short-term rentals are preoccupying many condominium
associations, but single-family rentals pose a different concern. The concern arises, Bauman explains, because large
real estate investment trusts (REITs) have purchased many
of the thousands of foreclosed single-family homes that
flooded the market during the "Great Recession." Instead
of selling the homes, the REITs have converted them to
rentals, and many of these single-family rental properties

Federal Housing
Administration Approves
New Condo Loan Guidelines

are in common interest ownership communities governed
by homeowner associations. CAI has two concerns,
Bauman explains:
A large percentage of rental homes "changes the
dynamics" in an ownership community; and
The Wall Street investors behind the REITs are lobbying
legislatures in many states to prohibit HOAs from
barring or restricting rentals in their communities.
CAI is trying to counter these initiatives, Bauman says,
by urging lawmakers "not to usurp the community
association governance model."
LICENSING
CAI is tracking two national licensing trends, neither involving
licensing requirements for community association managers.
The first: Concerned that licensing can be a barrier to entry
for many professions, lawmakers in many states are requiring
licensing entities to justify the need for licensing in professions where it is required. The second trend involves the
treatment of people with criminal records. Approximately
12 states have adopted measures that would prohibit regulations denying licenses or professional certifications to people
with criminal records in areas unrelated to those in which they
seek to work. CAI is tracking these measures closely, Bauman
says, because they could affect future proposals for manager
licensing and certification programs in some states.
CONSTRUCTION DEFECTS
Legislative Action Committees (LACs) in many states,
including Massachusetts, have been advocating measures
that would bar condominium developers from inserting
"poison pill" provisions in governing documents restricting
the ability of condominium owners to sue developers for
construction defects. Builders, for their part, have been lobbying for state laws insulating them from construction-defect
liability. CAI has discovered a new twist in this tug-of-war:
Builders in a few states have started linking liability limitations to affordable housing initiatives, refusing to construct
lower-cost condominiums unless lawmakers bar construction
defect suits. These measures, which have surfaced in Utah
and Washington State, can be appealing, Bauman says, to
legislators "who are desperate for affordable housing."
CAI is monitoring these initiatives and "trying to
explain to lawmakers that [barring construction-defect litigation] is not an affordable housing solution." If condominium
owners have to pay for what could be immense construction
and design repairs, she notes, "housing that is supposed to
be affordable would become very expensive."
December 2019 CONDOMEDIA

29



Condo Media - December 2019

Table of Contents for the Digital Edition of Condo Media - December 2019

Contents
Condo Media - December 2019 - Cover1
Condo Media - December 2019 - Cover2
Condo Media - December 2019 - Contents
Condo Media - December 2019 - 2
Condo Media - December 2019 - 3
Condo Media - December 2019 - 4
Condo Media - December 2019 - 5
Condo Media - December 2019 - 6
Condo Media - December 2019 - 7
Condo Media - December 2019 - 8
Condo Media - December 2019 - 9
Condo Media - December 2019 - 10
Condo Media - December 2019 - 11
Condo Media - December 2019 - 12
Condo Media - December 2019 - 13
Condo Media - December 2019 - 14
Condo Media - December 2019 - 15
Condo Media - December 2019 - 16
Condo Media - December 2019 - 17
Condo Media - December 2019 - 18
Condo Media - December 2019 - 19
Condo Media - December 2019 - 20
Condo Media - December 2019 - 21
Condo Media - December 2019 - 22
Condo Media - December 2019 - 23
Condo Media - December 2019 - 24
Condo Media - December 2019 - 25
Condo Media - December 2019 - 26
Condo Media - December 2019 - 27
Condo Media - December 2019 - 28
Condo Media - December 2019 - 29
Condo Media - December 2019 - 30
Condo Media - December 2019 - 31
Condo Media - December 2019 - 32
Condo Media - December 2019 - 33
Condo Media - December 2019 - 34
Condo Media - December 2019 - 35
Condo Media - December 2019 - 36
Condo Media - December 2019 - 37
Condo Media - December 2019 - 38
Condo Media - December 2019 - 39
Condo Media - December 2019 - 40
Condo Media - December 2019 - 41
Condo Media - December 2019 - 42
Condo Media - December 2019 - 43
Condo Media - December 2019 - 44
Condo Media - December 2019 - 45
Condo Media - December 2019 - 46
Condo Media - December 2019 - 47
Condo Media - December 2019 - 48
Condo Media - December 2019 - 49
Condo Media - December 2019 - 50
Condo Media - December 2019 - 51
Condo Media - December 2019 - 52
Condo Media - December 2019 - 53
Condo Media - December 2019 - 54
Condo Media - December 2019 - 55
Condo Media - December 2019 - 56
Condo Media - December 2019 - 57
Condo Media - December 2019 - 58
Condo Media - December 2019 - 59
Condo Media - December 2019 - 60
Condo Media - December 2019 - 61
Condo Media - December 2019 - 62
Condo Media - December 2019 - 63
Condo Media - December 2019 - 64
Condo Media - December 2019 - Cover3
Condo Media - December 2019 - Cover4
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