Condo Trouble w/ FHA Loans
Just catching up on my real estate reading and saw this piece from a couple weeks back in the Trib.'s real estate section regarding FHA restrictions related to buying condominiums. Here's the money 'graph:
FHA rules wreaking the most havoc locally are a requirement that a building must have four or more units. That means buyers of a condo in a three-flat need not apply. There's also a rule that a building's condo association cannot have a "right of first refusal" as part of its declarations of covenants and restrictions. Frequently in place but seldom used, right of first refusal enables an association to turn down a prospective buyer and then buy a unit from a seller.
I can't say I've ever dealt with this problem first hand but that's likely because FHA loans weren't used much until the last year. The right of first refusal restriction seems like it potentially has the greatest impact. From my experience more than 50% of condo associations include rights of first refusal. What's the history of those provisions?? I mean I've never heard or seen an association exercise it's right...getting it waived is generally a formality.
posted by Peter @ 1:43 PM
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During the Great Depression, the banking system failed, causing a drastic decrease in home loans and ownership. At this time, most home mortgages were short-term (three to five years), no amortization, balloon instruments at loan-to-value (LTV) ratios below fifty to sixty percent.The banking crisis of the 1930’s forced all lenders to retrieve due mortgages. Refinancing was not available, and many borrowers, now unemployed, were unable to make mortgage payments. Consequently, many homes were foreclosed, causing the housing market to plummet. Banks collected the loan collateral (foreclosed homes) but the low property values resulted in a relative lack of assets. Because there was little faith in the backing of the U.S. government, few loans were issued and few new homes were purchased.
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Mobin
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The FHA Home Loan System is becoming the most well-known way to financial the buy of houses across the country. It has always been well-known but have become more so in the last several decades because of the issues in the real estate industry.
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