Condo Media - October 2011 - 11

C A I

CAI Chides FHA
Guidance Misses the Mark
he Federal Housing Administration (FHA) needs to go back to the drawing board on the mortgage-approval guidance the agency issued June 30. “It’s clear from the guidance and the evidence presented that FHA has failed to undertake even the most basic due diligence,” CAI said in a July 22 letter urging the Office of Information and Regulatory Affairs (OIRA) to require FHA to reexamine its guidance. Reconsideration of the guidance, CAI added, “would benefit consumers and would ensure FHA adheres to the spirit and intent” of requirements for federal regulatory action. OIRA is currently reviewing the FHA guidance. CAI said the FHA guidance, as currently written, will make it more difficult for condominium associations to meet FHA certification guidelines, which could prevent many potential buyers from obtaining FHA-backed loans to purchase homes in those communities. Said CAI CEO Thomas Skiba, CAE, “We hope OIRA will take whatever steps are necessary to ensure that FHA conducts a more thoughtful, thorough and transparent analysis.”

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agency failed to identify the most effective ways to achieve its own regulatory objectives. That’s just unacceptable given the state of the housing market

add to the confusion and frustration.” FHA’s guidance letter addressed a number of issues. CAI took issue with mandates for fidelity insurance cover-

The FHA guidance, as currently written, will make it more difficult for condominium associations to meet FHA certification guidelines.
and the need for measures to stimulate a housing recovery.” CAI’s letter to OIRA says FHA also failed to: • Harmonize federal regulatory actions with applicable state laws. • Tailor its regulations to impose the least burden on individuals and businesses. • Draft regulations that are clear and easy to understand, thus minimizing the potential for confusion and uncertainty. “Many of these issues could have been avoided with greater transparency and collaboration on the part of FHA,” said Andrew Fortin, CAI’s vice president of government and public affairs. “For months, we’ve been providing information and perspective to FHA and urging greater communication between the agency and stakeholders in the housing market. It just hasn’t happened, and now we see regulations that will pose unnecessary burdens on homeowners, homebuyers, condominium communities and association management companies.” CAI fully understands the need for lending criteria and why it’s important to tighten approval for home loans. “But we also know that FHA has not done its homework,” Fortin said. “There is already confusion in the marketplace, and this guidance will only age, community association assessment delinquency criteria, project certification requirements and property deed restrictions. Visit Mortgage Matters on the CAI website www.caionlne.org to get more specific information about the FHA guidance and CAI’s appeal to OIRA. CM

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Guidance Adds Confusion
With quasi-governmental lenders Fannie Mae and Freddie Mac recoiling from unprecedented mortgage-related losses, FHA is assuming a greater role in the home-sales market, now standing behind at least 30 percent of new home mortgages. That makes FHA lending criteria especially critical, not only to individual homeowners and buyers, but also to any sustained housing market recovery. Despite that responsibility, FHA failed to identify and consider direct regulation alternatives. “This is a blatant lack of basic research that any government agency should conduct before drafting regulations,” Skiba said. “To compound the problem, the

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CONDO MEDIA • OCTOBER 2011

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Condo Media - October 2011

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