From the May issue: Is the Federal Housing Administration losing some of its post-boom, post-bust oomph? Is the Obama administration’s plan to gradually throttle back FHA’s home mortgage insurance volume already having effects — and if so, what might this mean to buyers? There are definitely signs that something’s brewing:
Total applications for FHA-insured single-family mortgages are down 30 percent year-to-year through March, according to the agency’s data. Applications from prospective home purchasers are down 35 percent. FHA’s popularity with buyers previously had sustained its high origination volumes. Click here to read more.  [more]

Mortgage applications for home purchases declined nationwide last week as a long-anticipated hike in insurance premiums from the Federal Housing Administration took effect, according to data from the Mortgage Bankers Association through April 22. While applications for refinancing remained relatively steady — down 0.6 percent from the week earlier — purchase applications declined by 13.6 percent from the previous week, reaching their lowest level since February. That drop-off was driven by a 26.6 percent fall in government purchase applications, the MBA said. TRD [more]

The Crown Condos

Some see Federal Housing Administration condominium re-certification
as a great tool to move units in a stagnant market. Others complain about
opaque and arbitrary rules governing decisions as to which projects get
recertified.

The only certainty: Out of the thousands of eligible condo projects across
the country, few have even applied to be recertified. (See chart below for the
largest condo projects in New York, with a pending deadline.)

For those condo projects that do get certification, it opens up a new
market segment for them to sell units. That’s because most conventional
mortgages and cash buyers are still hard to come by.

“It really is one of the only games in town when it comes to mortgages,”
said Lisa Magill, a real estate attorney and partner at Becker & Poliakoff in
Fort Lauderdale.

Still, condo boards are not rushing to get the agency’s blessing.

In January and February, the FHA approved 286 projects and rejected
89 re-certifications across the country. That includes none in New York,
according to FHA officials.

In 2010, FHA recertified three projects in New York, and it found eight
others ineligible. The Crown Condominiums at 580-600 Crown Street in Crown Heights was the only New
York City project to get the nod from FHA.

There are about 430 condo projects in New York City that are facing
deadlines to get recertified, according to FHA data.

The Federal Housing Administration’s re-certification basically insures
lenders against default. More than 25,000 condo projects missed a
December deadline to get approval for using FHA-insured mortgages. So
FHA instituted a new series of rolling deadlines. But that doesn’t seem to
have spurred much recertification activity.

Even with the current problems, FHA says the recertification program helps
make sure it’s backing buyers in financially stable condos, and not throwing
money at troubled projects. For those condos that do get the recertification,
they can sell units to the 30 percent of buyers who are seeking FHA-
backed loans.

“I do think there’s a lot of opportunity for these condo boards,” said Vicki
Bott, a deputy assistant secretary in the Federal Housing Administration.

In New York, few have moved to get FHA approval because the high-
priced Manhattan condo market doesn’t lend itself to such a program, said
Craig Price, a real estate attorney and partner at Belkin Burden Wenig &
Goldman, LLP in Manhattan. It may only make sense for stalled condo
projects in an outer borough, he said.

Even so, it’s a lot of money, time and paperwork. Price said he closed an
FHA-backed deal recently in New York which saw a five-month approval
process, and that was for a single-family home.

The frustrations have grown enough that the Community Associations
Institute, which represents thousands of condo associations across the
country, recently fired off a letter to FHA officials complaining about the
criteria and process the agency was using in making its decisions.

“CAI’s membership is making every reasonable effort to comply with FHA
condominium insurance program requirements, with many condominiums
spending as much as $6,000 to submit their condominium for certification
or recertification ….,” wrote Thomas Skiba, CAI’s CEO. “For this process
to work smoothly for both condominium associations and FHA, the
rules governing the program should be clear and consistent as well
as transparently and evenly applied by the homeownership centers.
Regrettably, this has not always been the case…”

FHA is all over the map with the rules on what percentage of a condo can
be rentals, said Andrews Fortin, vice president of government and public
affairs for the Washington DC-based CAI. Some criteria don’t even reflect
the fiscal health of the condo, and the agency hasn’t made it clear what the
rules are, he said.

“They’re essentially doing this by decree,” Fortin said.

FHA officials said that they’re working on addressing some of the issues
raised by CAI. The program has only been around for about a year, and
they’re planning on issuing new guidance on the program in June, they
said.

FHA recertification deadlines [more]

Mortgage loan applications for purchases climbed 9.3 percent last week to their highest level since early May, according to a ne [more]

David Stevens

Federal officials announced a new mortgage plan today targeted at senior citizen homeowners. The new reverse mortgage option is designed for homeowners taking out smaller loans than those offered in the standard federally insured reverse mortgage program. The new reverse mortgage option, known as the Home Equity Conversion Mortgage Saver, was created for homeowners who want to avoid the high cost of starting a standard reverse mortgage, according to David Stevens, commissioner of the FHA. “We have noted concerns that some senior citizens find that our fees are too high for them,” Stevens said. “In response, we created [the new program], which will provide seniors with a reverse mortgage option that significantly lowers costs.” TRD

[more]

In the wake of the Obama administration’s announcement yesterday that it would invest more money in helping block home foreclosures, real estate experts weighed in on the new stimulus in this MSNBC video. Anthony Sanders, a real estate finance professor, and John Taylor, president of the National Community Reinvestment Coalition, go head-to-head on the issue.

[more]

Be@schermerhorn

Downtown Brooklyn’s long-awaited be@schermerhorn condominium has
received preliminary approval from the Federal Housing Administration,
a first step toward the project’s ability to accommodate FHA-backed
mortgages. The approval comes on the heels of its recent third relaunch at
selling out the building. There are executed contracts for over 20
percent of the apartments in the 246-unit two-building complex at 189
Schermerhorn Street, putting it near the 30 percent mark needed for
closings to begin under FHA guidelines. Be@schermerhorn has studios and
one-, and two-bedroom units starting at 444 square feet and $265,950. TRD

[more]

505 West 47th Street

The 505 Condominium in Hell’s Kitchen announced it was approved for mortgage financing by the Federal Housing Administration.
Parkview Developers said that FHA approval will allow additional buyers to qualify for mortgage loans at the property, located at 505 West 47th Street. FHA financing allows buyers to get a mortgage with only 3.5 percent down payment.
The property is offering 108 units, starting with $425,000 studios up to two-bedroom units for $955,000.

[more]

505 West 47th Street

The 505 Condominium in Hell’s Kitchen announced it was approved for mortgage financing by the Federal Housing Administration.
Parkview Developers said that FHA approval will allow additional buyers to qualify for mortgage loans at the property, located at 505 West 47th Street. FHA financing allows buyers to get a mortgage with only 3.5 percent down payment.
The property is offering 108 units, starting with $425,000 studios up to two-bedroom units for $955,000.

[more]

Here’s a sobering message for anyone who has a federally insured reverse mortgage or plans to apply for one: If you don’t pay your local property taxes or hazard insurance premiums, you should know that the risk of [more]