Tuesday, March 22, 2011

Bit of FHA illogic undone on condos, I think

OK, here's word from HUD (more specifically here) that, effective last Friday, it's OK to grant FHA insurance for the purchase of a condo that doesn't allow the purchaser to rent it out in certain ways.

So, um, the purpose of the FHA is to help people afford their own homes, in which they intend to live, right? So FHA-financed houses are supposed to be the owners' own homes, not income properties, right?

So if I'm parsing all these double and triple negatives right, then the FHA just got special permission to help people buy condominiums for themselves even when the condos in question are in complexes that prohibit unit owners from leasing their units to others on a short-term or hotel-type basis.

So you are allowed to buy a condo with FHA help even if the terms of your purchase strongly encourage you to live in it yourself, thereby fulfilling the basic purpose of the FHA home mortgage program.

Why this had to be spelled out I don't pretend to know specifically.

In general, it seemingly had to do with some drafter on the Housing and Economic Recovery Act of 2008 failing to think things through.

No comments:

Post a Comment