FHA loans changing?

[DonziGirl]

I talked to my realtor yesterday and she said that the FHA loans are changing regarding condos. I guess now a complex can get approved and everything works well. Soon no one will be approved? And then if over 30% of the loans in the complex are FHA, then the potential buyer has to get a non-FHA loan to buy the condo. She thinks I'll have less of a chance to sell my place when this goes into effect.

Why is this? Anyone know?

 

[clayinaustin]

FHA Loans Hit Speed Bumps

Loans insured by the FHA currently cannot be issued in a condo conversion until at least one year after the condo has been declared effective.

What's more, changes to the agency's guidelines slated to become effective October 1 will drastically reduce the number of eligible buyers for the program by capping the number of FHA loans in a given project at 30 percent, even in FHA-approved developments.

"It wouldn't be possible for [buyers] to do it without FHA," he said. "To cap the units at 30 percent, it's ridiculous. To me, in this day and age, to do something like that is just terrible."

 

[DonziGirl]

Yep that's what I'm talking about. What is the reasoning behind this?

 

[Audiofn]

If I was a betting man I would say that it is to lessen the risk for the loan institutions.

 

[cigdaze]

The reason is due to the multitudes of condo complexes that are barely occupied, underfunded or flat out bankrupt. Without tennants, there are no association revenues, and maintenance and management are gone. There are so many people holding notes on condos right now in co-ops that have no services. They can't sell, and no one's buying in. It's flat out risky to lend on condos right now.

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There are thousands of stories like this all over the country:

FORT MYERS, Fla., July 30 (UPI) -- A New Jersey firefighter says he and his family are the only residents of a 32-story Florida condominium building -- and they want out.

Victor Vangelakos, 45, of Weehawken, N.J., said he purchased the Oasis I condo in Fort Myers from Miami-based The Related Group for $430,000 and closed in November, The (Fort Myers, Fla.) News-Press reported Thursday. Vangelakos intended to use the condo as a vacation getaway and, when he retires in four years, as a permanent residence.

But prices have dropped precipitously since a real estate bust, and only a handful of buyers who put down deposits closed. They have since swapped their Oasis I condos for units in neighboring Oasis II, said Betsy Lu McCoy, vice president and associate corporate counsel for Related.

McCoy said Vangelakos did not switch to the other building because his lender was unwilling to agree to the change.

John Ewing, Vangelakos' Fort Lauderdale, Fla.-based attorney, said the family wants Related to buy the condo back due to maintenance issues and other complaints.

"They have the ability to buy him out," Ewing said. "They can resolve this in a fair way."

But McCoy said the problem lies with Vangelakos' lender, JP Morgan Chase Bank.

"His concerns have not fallen on deaf ears," she said. However, she said the bank's decision not to transfer the mortgage to Oasis II is not Related's fault.

 

[DonziGirl]

That isn't good news for me.