Could the Trump administration revive FHA’s condo program and bring back the spot loan?
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According to the National Association of Realtors there were 614,000 condo sales completed in 2016… FHA provided financing for about 4%. It’s no secret that the Obama administration made the lending requirements for condos strict, some would even say… impossible? Late last year, FHA adjusted their owner occupancy requirements for condo developments from 50% to 35%. Unfortunately, that was not enough to stimulate an appetite for the FHA condo program. It does appear though that in 2018 help is on the way! According to a recent HUD report the agency is looking to make their lending requirements for condo’s… easier. The Washington Post put out a great article on this back in May. Check it out here.
Could this mean that we see the return of the “spot loan” program? For those of you wondering what the heck a “spot loan” is… it’s a program that the Obama administration put a halt to… but what it allows borrowers to do is purchase a unit in a condo project or building that has not been approved for FHA financing. That sounds scarier than it is… currently 7% of condo projects or buildings have FHA certification, thus making it difficult (impossible actually) to obtaining FHA financing for non-certified projects. The return of the “spot loan” could change all of that… and possibly make it easier to obtain affordable housing for oh let’s say a 24 to 32-year-old, with mounds of college debt, but a hankering to build personal capital buy owning instead of renting? Sound like a generation group we’ve been hearing and talking a lot about (cough… cough… Millennials)? It’ll be fun to see what happens!
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.