Layla Zulfa
Florida continues to be a magnet for new residents, with a significant surge originating from states like New York, a trend that is demonstrably impacting the state’s housing market. This sustained influx has driven up home prices not only in major metropolitan areas such as Miami, Tampa, and Orlando but also in their surrounding smaller communities, including Cape Coral, Port St. Lucie, and Brandon. The Florida Association of Mortgage Professionals (FAMP), representing a substantial segment of the state’s mortgage lending industry, is actively pursuing two key legislative initiatives – a property tax amendment and a revision to condominium financing rules – in an effort to mitigate the growing affordability challenges confronting Floridians.
In a candid interview with HousingWire, FAMP President Orlando Diaz, a mortgage professional with three decades of experience in the Florida market, articulated the compounding pressures on both prospective homebuyers and existing condo owners, particularly those on fixed incomes. "The current economic climate, characterized by elevated mortgage rates, escalating property taxes, and rising Homeowners Association (HOA) fees, is creating significant financial strain," Diaz stated. He emphasized that while interest rates and overarching housing prices are largely outside the purview of state legislation, crucial components like insurance and taxes remain within the legislative grasp. "This is precisely where the association is directing its focus and advocacy efforts," Diaz explained.
Florida Affordability Under Intense Pressure
The demographic shift into Florida has been substantial. Census data reveals that over 870,000 individuals relocated to Florida in 2024 alone. A notable portion of this migration, approximately 50,000 individuals, originated from New York, a state known for its higher cost of living and property taxes. This surge in demand, coupled with limited housing supply, has predictably inflated property values. While HousingWire data indicates a slight year-over-year decrease of around 2% in Florida’s median list price, settling at $482,000, localized markets are experiencing different dynamics. For instance, several ZIP codes within Port St. Lucie are reporting median list prices ranging from $505,000 to $519,000, underscoring the uneven impact of this demand.
On the property insurance front, the landscape has shown signs of improvement. An increasing number of insurance carriers are re-entering the Florida market, and recent hurricane seasons have been less severe than initially feared, leading to a stabilization, and in some instances, a reduction in insurance premiums. However, the persistent burden of property taxes continues to weigh heavily on Florida residents.
Proposed Property Tax Relief Initiative
To address the property tax burden, FAMP is a vocal supporter of a constitutional amendment slated for the November ballot. This proposed amendment aims to gradually eliminate property taxes on a portion of primary residences by progressively increasing homestead exemptions. The measure, which requires a 60% voter approval to pass, incorporates a five-year residency requirement for new arrivals to qualify for the benefits, alongside provisions designed to protect essential public services such as education funding. Diaz highlighted that the successful passage of this amendment could significantly alter the financial calculations for many Florida mortgage borrowers.
"The five-year residency requirement is a crucial component," Diaz noted. "It’s designed to discourage a rapid influx of individuals solely seeking immediate tax advantages, which could further exacerbate price increases. The tax relief itself will be phased in incrementally, with homestead exemptions gradually increasing until a certain percentage of primary homes are effectively exempt from property taxes." This phased approach is intended to provide a more controlled impact on the market and local government revenues.
Federal Condo Financing Rule Changes Spark Concern
Beyond state-level initiatives, FAMP is expressing significant concern regarding recent decisions by the Federal Housing Finance Agency (FHFA) concerning condominium financing. Specifically, the FHFA’s decision to discontinue the "limited review" process for condominiums and to increase the required reserve funds for condo associations from 10% to 15% by January 1, 2027, has raised alarms within the mortgage industry.
Historically, Florida had faced a more stringent 25% down payment requirement for limited-review condo loans, compared to the 10% required in other states. For two years, FAMP, in collaboration with Florida Realtors and U.S. Representative Byron Donalds, actively lobbied to align Florida’s regulations with the rest of the nation. However, the FHFA’s subsequent decision was to eliminate the limited review process entirely nationwide, rather than to simply equalize Florida’s requirements.
"We mounted a comprehensive campaign to highlight the inequity of the previous rules and to advocate for change," Diaz recalled. "We received word shortly before the new mortgagee letter was issued that a change was coming, and we were optimistic. Then, the FHFA announced they would be eliminating limited review altogether. While we achieved our goal of removing the disparate treatment of Florida, the method by which it was accomplished – by removing the option nationwide – was a significant blow." Diaz characterized the move as "brutal" for Florida’s market.
The elimination of the limited review process is particularly concerning because it served as a vital pathway for financing units in buildings that might not meet the stringent requirements of a full review. Diaz warned that this shift, combined with the increased reserve requirements, could push a substantial number of condominiums out of the conforming loan market and into the non-qualified mortgage (non-QM) sector. Non-QM loans typically have stricter loan-to-value (LTV) ratios, capping them at 90%, in contrast to the 95% to 97% LTVs often available with conforming loans. This would necessitate larger down payments, potentially higher interest rates, and increased overall costs for borrowers, further straining affordability in an already challenging market.
The Impact of Increased Reserve Requirements on Condo Owners
The mandate for condo associations to maintain higher reserves, escalating from 10% to 15% by 2027, presents another significant hurdle. Reforms implemented in the wake of the 2021 Surfside condominium collapse already compelled many Florida condo associations to increase their reserves, often resulting in higher HOA fees or special assessments. Diaz described the jump to 15% as "a huge, huge change" that could disproportionately affect older or less financially sophisticated associations.
While Fannie Mae and Freddie Mac will consider professional reserve studies that demonstrate lower reserve needs, Diaz expressed concern that many condo boards operate with "antiquated" practices and may not be fully aware of the 2027 deadline. This lack of awareness could lead to a scenario where unit owners discover their building is ineligible for conforming financing only when attempting to refinance or sell their property.
The potential for increased assessments to meet these higher reserve mandates could force some fixed-income owners to sell their properties. This could occur in a market with a shrinking pool of qualified buyers, thereby increasing the likelihood of distressed sales and potentially driving down property values in affected buildings. "You’re limiting your pool of potential buyers," Diaz cautioned.
Advocacy for Time and FHA’s Role
In response to these challenges, FAMP is collaborating with national organizations, including the National Association of Mortgage Brokers (NAMB) and the National Association of Realtors (NAR), to advocate for two primary policy changes:
- Extension of Limited Review: A request to extend the limited review process for at least six to eight additional months, providing more time for lobbying efforts and industry education on the implications of its removal.
- Delay of Reserve Requirement: A push to postpone the implementation of the 15% reserve requirement from 2027 to 2028, allowing associations more time to budget and prepare for the increased financial obligations.
Diaz estimates the chances of success for these advocacy efforts at approximately "50-50" but indicated that FAMP is committed to an aggressive lobbying strategy, which may include trips to Washington D.C. "If we can push this to 2028, it would give associations the necessary time to incorporate these changes into their budgets," Diaz stated. "It would also provide us with more time to lobby for potential modifications, as 15% is a substantial increase for reserves. We were already encountering difficulties at the 10% level, so this could represent a significant problem for condominiums across Florida."
Furthermore, the association is actively exploring strategies to increase the Federal Housing Administration’s (FHA) involvement in approving Florida condominium projects. FHA loans, with their lower down payment requirements and more flexible credit standards, are a critical entry point for many first-time homebuyers. However, Diaz noted that "FHA is not a significant player at all in Florida when it comes to condominiums."
FAMP’s collaborative efforts extend to organizing a housing summit with Representative Donalds and aligning government affairs agendas to present a unified message on housing affordability and condominium financing. "We are currently experiencing an exceptionally positive and productive working relationship," Diaz remarked, highlighting the strengthened partnerships.
Representing approximately 55,000 licensed professionals in its 66th year of operation, FAMP is steadfast in its commitment to centering its advocacy efforts on enhancing affordability for both mortgage originators and consumers alike, recognizing the interconnectedness of these two vital groups within the housing ecosystem.
