Local Law Blogs

How To Understand the Federal Housing Administration Financing Guidelines and the Fiduciary Duty of Condominiums

By Stark & Stark

David J. Byrne, Shareholder and Co-Chair of Stark & Stark's Community Association Group, authored the article, How To Understand the Federal Housing Administration Financing Guidelines and the Fiduciary Duty of Condominiums, for the October 18, 2010 edition of the New Jersey Law Journal.

The article discusses the Federal Housing Administration's (FHA) recent, and stricter, changes to the approval process for condominiums to be eligible for FHA financing. Mr. Byrne stresses that condominiums, and their managing agents and attorneys, must be aware of the mortgage market and how tightened underwriting standards will affect association operations and property values. Under the proposed regulations, all condominiums previously approved for FHA financing would have to be re-approved or FHA financing would not be available. These regulations include things such as how projects consisting of four or more units can have no more than 30% of the total units encumbered with FHA insurance, how eligible associations must have the transfer of control passing to the owners of units no later than:  (i) 120 days after the due date 75% of the units are conveyed to unit purchasers; or (ii) one (1) year after completion of the project evidenced by the first conveyance to a unit purchaser and how existing condominium project approvals will expire two (2) years from the date placed on the list of approved condominiums.

Full post as published by New Jersey Law Blog on October 29, 2010 (boomark / email).