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FHA delays new condo rules

Industry groups worried about unintended consequences

The Federal Housing Administration is delaying implementation of new rules for condo approvals until Dec. 7 and will reportedly pull back from some changes that critics said would have delayed or derailed many condominium sales.In a June 12 letter to lenders, the Department of Housing and Urban Development announced FHA would implement a new approval process for condominium projects on Oct. 1.As originally proposed, FHA would have been limited to guaranteeing loans on no more than 30 percent of units in any one condo project, instead of the 50 percent currently allowed.HUD also said only condos in FHA-approved projects would be eligible for the government's mortgage insurance program, eliminating a "spot loan" approval option that's been in place since 1996 for approving individual loans in buildings that haven't been certified yet.Even more problematic for lenders, HUD said all condo projects -- including 40,000 developments already on the FHA approved list -- would have to ...