Condo Reform Bill Signed Into Law
John Jordan | August 1, 2016
WASHINGTON—On Friday, July 29th, President Barrack Obama signed into law H.R. 3700, the "Housing Opportunity Through Modernization Act.” The legislation includes reforms to current Federal Housing Administration restrictions on condominium financing, among other provisions, and was long supported by the National Association of Realtors.
The U.S. Senate had approved the measure by unanimous consent on July 14. NAR testified last year in support of the bill, which passed in the House of Representatives 427-0 in February of this year.
Changes to exiting federal law include efforts to make FHA's recertification process "substantially less burdensome," while lowering FHA's current owner-occupancy requirement from 50% to 35%. The bill also requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.
Tom Salomone, president of NAR and broker-owner of Real Estate II Inc. in Coral Springs, FL, praised the legislation as a significant step towards eliminating barriers to safe, affordable mortgage credit for condos. He also thanked members for responding to a Call to Action to have Congress pass the legislation.
Salomone released a statement earlier this month when the Senate passed the bill. He stated, "Condominiums often represent an affordable option that's just right for first-time and low-to-moderate income homebuyers. Unfortunately, overly-burdensome restrictions on condo financing have for too long put that option out of reach for many creditworthy borrowers. This legislation meets those restrictions head on, putting the dream of homeownership back in reach for more Americans.”
He continued, "Tight inventory and rising home prices are a reality of today's market, and mortgage credit is hard to come by. We should take every opportunity to clear the path for well-qualified borrowers to purchase a home when they're ready, and this legislation does just that.”
NAR Senior Policy Representative Megan Booth said that the owner-occupancy ratio change from 50% to 35% would automatically go into effect in 90 days unless HUD makes a change to the correct formula. Other changes called for in the new law will have to go through a regulatory process with HUD, she noted. Booth said that NAR plans to work with HUD to implement those changes as soon as possible.
Photo Caption: Tom Salomone, President of NAR