Previously, the FHA’s strict eligibility rules, which excluded many condo buildings and caused a great number of condo associations to abandon the program, meant that seniors living in ineligible buildings missed out on the advantage of its low down-payments. Added to that, the agency got rid of “spot loans”, which offered mortgages for individual units that weren’t universally certified. But with these rules on the way out, FHA Financing has finally been made accessible again to buyers like seniors, who represent 90 percent-plus of all reverse mortgages.
One of the FHA’s tests of eligibility was a building’s percentage of owner occupants. Congress has passed a bill requiring that the FHA drop its 50 percent owner-occupied requirement to 35 percent or provide justification by the end of October. But the FHA has stalled, and offered a subtly different proposal, which could affect the availability of loans to many. The FHA’s alternative approach is to select within an owner-occupancy range between 25 and 75 percent. This means that in some cases the owner occupancy percentage could be more than what it is currently, though in other cases even less than what Congress has dictated. FHA financing will be more accessible than before, but as the deadline approaches we will see if the agency reserves the right to exceptions that could still make it a closed door to some.
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For more on this story, please see click here to read the Boston Herald’s report.