If you are planning on buying condos with financing this will apply to you or if you are buying these and expecting to sell them to end buyers....this will affect you too.
As of this past July, FNMA began requiring that condominium purchasers buy property insurance for all internal improvements in the unit, such as walls and kitchens; in the past, most lenders were satisfied with the condominium association having insurance on the exterior parts of the unit; now all lenders are requiring this “interior betterments” coverage. Again, this is a good consumer requirement but it has made purchasing a condominium more expensive.
Another new requirement is that condominium associations have mandatory manager’s liability and defalcation coverage. Again, this is a good thing long-term for the unit owner, but, if the association currently does not have this kind of insurance, the buyer will not be able to purchase the unit because the buyer cannot force an association to change coverage.
FHA has revised one of its long-standing condominium procedures. For any unit owner to receive an FHA mortgage, FHA has required that the entire condominium complex be approved for FHA mortgages, pursuant to a complicated and time-consuming application process supervised by the association’s board or manager. FHA mortgages are crucial for condominium unit purchasers, because such units are frequently bought by first-time homebuyers who qualify for the low down payment financing FHA makes available.
There are many more restrictions that FHA has placed into effect....please see my other post on this subject for more information.
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