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| FHA Condo rules |
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The Federal Housing Admin has imposed rules that will essentially kill the condo market. FHA
lending rules are too restrictive, and devoid of reason. Individuals
are forbidden to own over 10% of units in any project. New FHA rules,
which went into effect October 1st, prohibit any new FHA-backed loans
on condo units in projects that include more than 25% commercial space.
Condo developers and banks cannot escape the strict rules. “I am predicting that what we will see is whole condominium complexes sitting empty,” said
Jill Hoogendyk of Wallick & Volk in Glendale Arizona. The new FHA
rules for underwriting condo loans create very serious valuation
problems in the condo marketplace, where values can suddenly switch
from fair market values to almost nothing in weeks. The USGovt policy
is consistently and predictably idiotic. Does an interest rate hike
come amidst a flood of foreclosed property, led by condos? Never
confuse Wall Street liquidity revival with economic revival.
From Jim Willie, CB
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