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Is this the end of FHA financing for condos?

Blog - 2014 - 06-26 - FHA BYE BYE

Sensational title, I know.   However, HUD is forcing condominium associations to make some tough decisions.  Part of their recent updates to FHA includes a rider that says an association can’t require a background check for renters.

Of all of the odd requirements that FHA demands, this one has gone too far.  The Pointe of Saint Paul will no longer be FHA approved, because of this.  I happen to live at the Pointe, and I stand behind the Board of Directors 100% on their decision to drop their certification.

FHA certification is supposed to make sure the building is healthy, and I can’t see one positive reason why having renters in your association without background checks is a good idea.

Now, in all fairness, FHA is not saying renters can not have background checks, it’s just saying associations can’t require an owner provide proof that one was done.  I would guess that a majority of landlords absolutely would screen their tenants, but then again these landlords probably didn’t finance with FHA either.  From what I can tell, FHA wants to make sure that if their buyer needs to rent out the property, there should be zero obstacles in their way.  Again, if FHA is designed to get first-time buyers or credit-challenged buyers into homes, why they care about the rental requirements is beyond me.

I’m guessing within a year or two, HUD will get a clue and will relax their requirement on this issue.  In the mean time, expect to see less and less FHA approved condo buildings.

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