FHA condo rules will help millennials in housing market, Carson says
WASHINGTON — Shut out of the housing market, millennials could become a "lost generation" when it comes to homeownership, said Ben Carson, the secretary of the Department of Housing and Urban Development.
"All of us have heard the stories about millennials living at home, renting, or sharing rooms. And many of these people are creditworthy, but feel excluded from the possibility of homeownership. You can understand the frustration. It cuts across an entire age group," Carson told a housing symposium Friday sponsored by the National Housing Conference.
The HUD secretary pointed out that the purchase of a condominium unit is often the first step in homeownership and a "way of moving up the ladder" to a larger home.
Last November, the Federal Housing Administration amended its owner-occupancy standards for condominium developments, reducing its owner-occupancy minimum from 50% to 35%.
"Ultimately, this action will allow more people, including millennials, to use FHA to buy a condo," Carson said.
Carson also noted that Fannie Mae is increasing its maximum debt-to-income ratio, which could increase access to condo and other single-family loans. Fannie has made enhancements to its automated underwriting system that will increase its maximum DTI ratio from 45% to 50% for new loans starting July 29.
"Such an action would help millennials, although FHA loans would remain an attractive powerful option," Carson said.
While the housing market is generally in good shape, he said, "After the turbulence of 2008 we must remain vigilant" and "we must continue to maintain responsible lending practices."
It appears millennials are being "punished as an unintended byproduct of the financial crisis of 2008," Carson said.
He urged mortgage lenders and banks to do "everything they can to help creditworthy millennials buy their first home."