GSEs have been trying to standardize the review process for condo projects, which made up about $125 billion in mortgages in 2015, says Jacqueline Doty for CoreLogic. Condo sales represent about 10% of the overall home sales market (or 500,000 units per year), and 80% of condo mortgages are conventional loans backed by GSEs.
GSEs introduced a new Condominium Project Questionnaire (Full and Short Form) in March that lenders can use to collect the information their underwriters need to determine project eligibility. The new forms aren't mandatory and lenders can still use their own questionnaire, but reactions to the new forms seem to be positive so far.
The Federal Housing Administration (FHA) is reportedly preparing new guidelines that will loosen what some observers believe is currently the most restrictive condo approval process. Housing and Urban Development (HUD) Secretary Julian Castro, speaking at the recent National Association of Realtors conference said, “[W]e're moving forward on a rule change that's going to make it easier for folks to buy one of the most attractive options for young professionals and retirees: Condominiums. HUD's Condo Rule is out the door and with OMB. That means we're another step closer to giving more builders, sellers, and buyers the market flexibility they deserve.”
While details are still under wraps, housing advocates and COAs are hoping that the FHA will simplify the certification process, allow a greater proportion of commercial space and perhaps again allow for “spot loans.”