HUD reviewing Puerto Rico plan to develop grant agreements totaling $8.2 billion
New FHA-eligible condo rules expected this summer
SAN JUAN — The U.S. Department of Housing and Urban Development said it is reviewing the action plan submitted by Puerto Rico to develop the grant agreements for some $8.2 billion assigned earlier this year for the island’s recovery from Hurricane Maria.
HUD’s acting deputy secretary, Brian Montgomery, said that after giving the island $1.5 billion in February, the department is reviewing an action plan submitted by the government for a second group of funding totaling $8.2 billion to, among other things, support safe housing.
“We are reviewing the action plan and developing a grant agreement,” he told Caribbean Business in an aside during the annual convention of the Mortgage Bankers Association.
Puerto Rico also obtained a third allocation of $8.3 billion out of a total $15.9 billion in mitigation funding given to all U.S. states.
“The mitigation group of money is $15.9 billion for the whole United States; Puerto Rico gets $8.3 billion of that but that is long-term investment. We, at HUD, still need to publish a federal register notice for all states that are going to get money including Puerto Rico. That would be longer term,” he said.
While he acknowledged frustration in the distribution of funding, he said HUD wants to make sure the money is spent transparently. Puerto Rico, he said, is getting an unprecedented amount of funding from HUD, so it will take time for the money to be spent.
Montgomery also said HUD should complete by the end of the summer the much-awaited rules for condominiums that make it easier for these to receive Federal Housing Administration (FHA) financing, three years after first announcing them.
However, those rules will keep a prohibition that bans the FHA from certifying condominiums under the FHA loan program if they have apartments that are rented for less than 30 days.
“They still have to be owner-occupied under the new regulations. There will be some benefits but they still have to be owner-occupied,” he told Caribbean Business.
While these prohibitions have been in effect for years, HUD is now paying particular attention to enforcing its ban against the use of condo units for transient purposes because of the proliferation of short-term rental platforms such as Airbnb. The prohibition would make it less attractive for buyers to purchase apartments in condominiums, as FHA loans are the most flexible in qualifying applicants and have low initial and closing costs. Puerto Rico, currently, has more than 10,000 properties available for short term rental.
Montgomery said the new rules, which are pending approval from the Office of Management and Budget, will be more reflective of the current market.