June is National Homeownership Month and HUD and the FHA have been sponsoring activities across the country. The theme this year, “Promoting and Protecting Homeownership,” emphasizes consumer education about loans and the lending process. Homebuyer Education is the first and one of the most important step towards successful homeownership

 This week, Rich and Steve spoke with Christine Hannifan, executive director of The Housing Network of Rhode Island. 10 of its Associate members run the Homeownership Connection, A homebuyer education training program   In addition to promoting National housing Month, June marks the 15,000^th graduate completing the education program at The Connection.

No matter what stage of homeownership you are in, from just thinking about it to homeowners looking for help to stay in their home, The Homeownership Connection offers a range of classes, counseling and workshops to low and moderate income residents throughout the state.  

The Homeownership Connection offers a range of pre- and post-closing programs including:

• Homebuyer education
• Counseling
• Home repair and maintenance
• Landlord training
• Lead law informational training
• Financial Fundamentals
• Foreclosure prevention
• Predatory lending prevention and awareness campaign
• How to Buy a Foreclosed Property
• Foreclosure Prevention Workshops 

This Week’s Real Estate Insight:

Teaching prospective homebuyers about the home buying process and basic financial literacy skills creates more mortgage-ready buyers and helps those buyers become successful long-term owners.  Freddie Mac states that education and counseling help lower mortgage delinquency by 19% and improve most borrowers’ credit picture.

 HUD issued Mortgagee Letter 2009-19 with important changes to the guidelines for Condo financing.  The guidelines were originally scheduled to take effect on October 1^st, but are now scheduled to take effect November 2^nd.   One of the major changes has to do with the Approved Condo list; Currently, FHA has a list of Approved Condo’s,   if a project is on the approved list then FHA financing is allowed, if the project met the other requirements.  Spot Approval provided a way to close FHA loans in projects that were not approved; spot approval will no longer be allowed.   According to the new guidelines, any project not approved in the past 12 months will be taken off the FHA Condo Approval list and new projects currently approved will have 12 months to re-certify, so basically the entire list of approved condo’s is being redone.  

Here are some more proposed guidelines to be mindful of:

• 4+ units can have 30% maximum FHA financed units, (which might change to 50%).
• No more than 15 % of the units can be in arrears of the condo association fee.
• No more than 10% of the units can be owned by a single investor.
• 2 and 3 units are now allowed, but HUD will only insure one of the units.
• Right of First refusal considered on a case by case basis, (as long as you can prove it is not discriminatory).

This Week’s Real Estate Insight:

If you are thinking about buying a Condo with FHA financing, do yourself a favor and look for HUD approved units.  If you are selling a unit that is not HUD approved, understand that the pool of buyers is smaller, and non HUD approved Condos are going down in value, you might have to price below market to compete.  If you live in a non- approved building, strongly suggest to your Condo Board that they go about the approval process.

To find out if a condo project is FHA approved, click here for the HUD webpage: FHA condo approval search