These two new requirements appear on pages 4 and 5 of Mortgagee Letter 2009-19, dated June 12, 2009. Now, to be honest, the letter also states that these new rules “…are effective for all case numbers assigned on or after October 1, 2009…”. That means, any projects currently under construction, with an approved FHA case number, will not be impacted by the proposed changes. Well, thank goodness for small favors.

Condominium homes are generally the first rung on the ladder to home ownership. They normally provide a more affordable product for move-down and first time home buyers. In addition, current land planning and greenhouse gas emission reduction initiatives focus on increasing density in urban areas to promote transit use and slow the impact of growth on the problems associated with global warming. It appears that HUD is trying to promote the reduction of condominium construction and decreased urban densities by making the provision of FHA financing for condos more difficult to achieve.

My plea is for HUD to reconsider their position stated in Mortgagee Letter 2009-19. Do not make affordable housing more difficult to build and sell. Do not take away the best product builders have to deliver housing affordable to the average citizen. Do not incentivize low density development because your new rules create such great hurdles for the construction and sale of higher density product.

Again, the pendulum has swung too far. The regulators are regulating for the appearance of control, while in reality, they do not understand the impacts they are creating.