FHA-Implementation of Condominium Project Approval Owner Occupancy Requirement
Today, the Federal Housing Administration (FHA) published Mortgagee Letter 2016-15 which establishes FHA’s condominium project approval owner occupancy percentage requirement, as mandated by the Housing Opportunity through Modernization Act of 2016 (HOTMA). FHA believes this requirement offers a balanced approach between providing affordable, sustainable housing opportunities and managing risk to FHA’s Mutual Mortgage Insurance Fund (MMIF).
Specifically, Mortgagee Letter 2016-15 amends FHA’s Condominium Project Approval and Processing Guide, and:
- Clarifies the definition of owner occupancy;
- Establishes conditions under which FHA will allow owner occupancy in Existing Projects as low as 35 percent, and retains a generally applicable 50 percent owner occupancy requirement for all other Existing Projects; and
- Retains a minimum owner occupancy requirement of 30 percent of the declared units in Proposed and Under Construction Condominium Projects.
Provisions contained in the Mortgagee Letter are effective immediately upon publication for all condominium project approval, recertification, annexation, or reconsideration applications submitted for review.