- Category: FHA
Community Association Institute has reached out to the leadership of FHA to express concern over continued problems and mismanagement of the condominium insurance program. The program requires condo associations to get FHA approval for the entire association in order for any buyer to qualify for FHA financing to purchase a condominium unit. As FHA’s share of condominium mortgages has exploded during the housing crisis from less than 5% to 30% of all mortgages, sound underwriting guidelines and administration are critical to ensure appropriate qualification criteria are adopted. To date, FHA has continued to issue guidance with no public notice or stakeholder input. The result is an increasingly troubled program that is needlessly disqualifying healthy condominium associations and burdening homeowners with added compliance costs.
In a letter dated March 1, 2011, Tom Skiba, CAI’s CEO called on FHA to heed it’s own policy recommendations and to engage in publishing draft regulations for stakeholder comment prior to implementing any changes to the existing condominium insurance program. In addition to expressing concerns over the process by which FHA has adopted rules for condominium mortgages, CAI expressed frustration over arbitrary criteria and inconsistent treatment of condominium approvals. To date, CAI has tried to work with FHA staff in addressing emerging issues related to the FHA program, however, the process continues to be plagued by a lack of transparency in process and application of the rules to associations. CAI will follow this letter with outreach to appropriate oversight committees in Congress.
You can read the entire letter here.