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Community Associations Institute (CAI) applauds the actions by the U.S. Department of Housing and Urban Development (HUD) to streamline the Federal Housing Administration's (FHA) condominium project approval process.

“FHA-insured mortgages are critical to helping creditworthy first-time, minority, and underserved households achieve the American dream of homeownership," says Thomas M. Skiba, CAE, CAI's chief executive officer. “FHA's bureaucratic process meant many of these households were shut out of condominium homeownership."

HUD data shows condominium unit mortgages currently account for fewer than 2% of all FHA-insured mortgages, exposing a critical failure of federal housing policy. The changes announced by FHA are intended to allow the agency to expand homeownership for many Americans.

Millions of homebuyers could benefit from the changes. The Foundation for Community Association Research (FCAR) estimates 40% of the nation's 27 million community association households call a condominium home, accounting for approximately 10% of the nation's housing stock.

“Following the housing crisis in 2008, the FHA condominium approval process severely impacted access to FHA-insured mortgages, which hurt homeowners and household formation. This is counter to FHA's statutory mission—its reason for being," says Dawn M. Bauman, CAE, CAI's senior vice president for government and public affairs. “A balanced, data-driven condominium approval process at FHA has been a long-term public policy priority for CAI. Today's announcement marks a return for FHA as a key long-term partner for condominium associations."

Key elements of the newly released approval process include:

• Single-unit approvals allowed: FHA will insure up to 10% of mortgages in condominiums without FHA approval provided the condominium is financially stable. This is a game-changer for expanding the access to FHA-insured loans for condominium buyers, especially for smaller condominium projects. It is costly for a condominium association to become FHA-certified. This will allow owners to access FHA-insured loans without the burden of requiring the association to become fully certified.
• Project approvals extended: FHA approvals for condominium projects extended from two to three years.
• Recertification process simplified: Condominium projects seeking recertification are only required to update new information rather than resubmit all project information.
• Commercial space restrictions eased: Mixed-use condominium projects with up to 45% commercial space will be eligible to apply for approval. FHA recognizes the changing nature of mixed-use projects that are prevalent in many urban areas.
• Owner occupancy rates lowered: Condominium projects with owner occupancy rates as low as 35% will be eligible for FHA approval based on the project's financial and operational stability. FHA previously required at least 50% of units in a condominium to be owner-occupied.
• FHA concentration rate increased: FHA will now insure up to 75% of condominium unit mortgages in a condominium project.

• Future policy changes opened to public comment: FHA will provide a 30-day public comment period prior to implementing future changes to the condominium approval process.

To view the final regulation, click here.

About Community Associations Institute 
Since 1973, Community Associations Institute (CAI) has been the leading provider of resources and information for homeowners, volunteer board leaders, professional managers, and business professionals in the nearly 350,000 homeowners associations, condominiums, and housing cooperatives in the United States and millions of communities worldwide. With more than 41,000 members, CAI works in partnership with 36 legislative action committees and 64 affiliated chapters within the U.S., Canada, South Africa, and the United Arab Emirates as well as with housing leaders in several other countries, including Australia, Spain, Saudi Arabia, and the United Kingdom. A global nonprofit 501(c)(6) organization, CAI is the foremost authority in community association management, governance, education, and advocacy. Our mission is to inspire professionalism, effective leadership, and responsible citizenship—ideals reflected in community associations that are preferred places to call home. Visit us at www.caionline.org and follow us on Twitter and Facebook @caisocial.