View Rule

Through this rule, HUD amends its policies and procedures for projects to be approved as condominiums in which individual units would be eligible for mortgage insurance. Insurance of condominiums in approved projects was first authorized by the Housing and Economic Recovery Act (HERA) of 2008. HERA moved the insurance of a single unit condominium unit in a project without a blanket mortgage from Section 234 of the National Housing Act.  There are no existing regulations under section 203.  While HERA permitted the program to be operated via guidance pending the issuance of regulations, more recently, the Housing Opportunity Through Modernization Act of 2016, Public Law 114-201 (HOTMA) contains specific provisions regarding condominiums under section 203.  Relevant to this rule, HOTMA requires: changes in requirements for project recertification; requests for exceptions to the commercial space percentage requirement to be made either through the HUD review process or through the lender review and approval process; and for HUD to issue guidance, by rule, notice, or mortgagee letter, regarding the percentage of units that must be owner-occupied, including as a secondary residence. The rule also includes a savings provision preserving section 234 insurance where the project has a blanket mortgage.