The election of Donald Trump as the President of the United States ushers in uncertainty for a variety of federal housing policies which affect the financing and governance of homes in community associations–condominiums, homeowner associations and housing cooperatives. During the election campaign, Trump said little about the federal role in promoting homeownership.
But, his support for reduced government regulation and the 2016 Republican Platform provide clues about how a Trump Administration may impact community associations.
FHA-Insured Condominium Loans. After years of deliberation, the Federal Housing Administration (FHA) issued proposed rules in late September regarding FHA condominium certification which allows condo unit owners to obtain FHA-insured loans . The rules would ease some criteria such as owner-occupancy and commercial/residential ratios but allow FHA staff to develop the details of other eligibility standards.
With new leadership at the Department of Housing and Urban Development (HUD) and the FHA, issuance of final rules might be held up for further review. The Republican Platform calls the FHA “poor-managed” and promises to limit taxpayer exposure to “risks taken by FHA officials” and end FHA loans for high-income individuals. Whether this results in more stringent FHA lending standards for condominiums is unknown.
Fannie and Freddie. For many decades, Fannie Mae and Freddie Mac have facilitated the availability of residential mortgage financing by purchasing home loans which they sell to investors as mortgage-backed securities. Since the onset of the Great Recession in 2008, Fannie and Freddie have been run by the federal government’s Federal Housing Finance Agency (FHFA).
The Republican Platform calls their operations a “corrupt business model” which lets their shareholders and executives “reap huge profits while the taxpayers cover all losses”. It promises that a Republican Administration would reconsider the usefulness of Fannie and Freddie and clear away “the jumble of subsidies and controls that complicate and distort home-buying”. And, the Platform declares that the Republican goal is to end government mandates that require Fannie Mae, Freddie Mac, and federally-insured banks to satisfy lending quotas to specific groups.
What happens to Fannie, Freddie and the future of housing finance is up to the new President and Congress.
Assessment Lien Priority. In recent years, the FHFA has actively sought to invalidate state laws which give a foreclosure priority to the assessment liens of condominium and homeowner associations. In court litigation and legislative advocacy, FHFA contends that state lien priority laws are pre-empted by federal banking law. With Republicans often favoring state regulation over federal regulation, it is uncertain whether there will be a continued federal assault on state assessment lien laws.
Housing Harassment. Just weeks before the presidential election, the United States Department of Housing and Urban Development adopted fair housing rules regarding “hostile environment harassment” which could make condominiums, housing co-ops and homeowner associations liable for the discriminatory conduct of community residents. The new rules establish nationwide standards which HUD will apply in enforcing the federal Fair Housing Act with respect to alleged harassment based on race, color, religion, national origin, sex, familial status or disability.
Under the housing harassment rules, a community association could be in violation of the fair housing laws if its board of directors fails to take prompt action to correct and end a discriminatory housing practice by a community resident, where the board knew or should have known of the discriminatory conduct and has the power to correct it.
Whether the HUD leaders in the Trump Administration will follow this newly-minted policy, or seek to revise or reverse it, is unknown.
Jobs, immigration, and terrorism are the hot button issues which grab the headlines. However, there are also many decisions to be made by the new President, housing agency officials, and Congress which will impact homeownership and community associations. As the Trump Administration begins, the only certainty about the future of federal housing policies is….uncertainty!
Posted by Thomas Schild Law Group, LLC, attorneys for condominiums, homeowner associations and housing cooperatives in Maryland–including Montgomery County, Prince George’s County, Howard County, Frederick County, and Baltimore County; and in Washington, D.C.