FHA proposes new workaround for condo market

Industry experts worry fix amounts to too little, too late

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Good news for potentially thousands of condominium unit owners and homeowners association boards around the country: FHA has backed off a controversial policy that had threatened to force large numbers of condo projects out of compliance with the agency’s certification and recertification rules. Loss of certification would mean that affected projects no longer would be eligible for low down payment FHA financing on any of their units. As a result, buyers who need FHA loans would be shut out, unit owners would find it more difficult to sell, and property values would suffer. Problems with FHA’s certification rules have been bugging condo associations for more than two years, and have dramatically reduced the number of projects eligible for FHA unit financing -- down by more than a third, from 40,000 to 26,652 as of June. But last week, FHA signaled a willingness to work with the condo industry to resolve the latest controversy by providing a "workaround" covering the agency...