A Bipartisan Effort to Make Homeownership More Affordable
The Housing Opportunity Through Modernization Act was hailed as a significant step towards eliminating barriers to safe, affordable mortgage credit for condominiums when it passed in July 2016.
Two years later, Senators from both sides of the aisle, led by Tim Scott (SC) and Bob Menendez (NJ), are calling on HUD Secretary Ben Carson to finally make condominium ownership a more feasible option for American families by issuing the final rule for this legislation.
According to statistics, condominiums remain one of the most attainable and affordable options for first-time homeowners, minorities, and older residents.
Senators Request Final Rule
The two Senators sent a letter to the Secretary that was also signed by 52 of their fellow colleagues.
In part, the Senators wrote:
“…the Housing Opportunity Through Modernization Act was signed into law on July 29, 2016. Section 301 of the statute makes a number of changes to the Federal Housing Administration’s (FHA) condominium rules that would streamline and simplify requirements for condominium buildings to qualify for FHA approval… Unfortunately, nearly two years later, the final rule has yet to be issued. At a time when homeownership remains out of reach for far too many families, the FHA should expand affordable and sustainable access to home mortgage credit by issuing a final condominium rule.”
While the cost of condos has increase, overall condos are more affordable. The median existing single-family home price was $267,500 in May, which is $23,500 more the median price for a condo.
As an example of how condominiums offer a more affordable path to home ownership, in the Myrtle Beach, South Carolina area the average cost of a condo is 40 percent less than the cost of a single-family home. However, the current pace of the FHA’s approval process for condo applications for FHA insurance coverage has not kept up with demand. More than 80 percent of condos in consideration for FHA insurance coverage in South Carolina have outstanding applications.
Impact Of The Final Rule
The letter continues to explain how the Department’s rule will:
- help stabilize condominium associations
- ensure that homeowners will be able to sell their units more easily
- provide homebuyers more opportunities to buy affordable properties
When finalized, the rule will be easier for individuals to finance condominium loans, while continuing to protect borrowers and maintain necessary safeguards to the FHA Mutual Mortgage Insurance Fund.