FHA Easing Condo Lending Requirements To Help Boost Condo Sales
“It was determined that certain policy adjustments were needed to address current housing market conditions,” the FHA said in a letter to mortgage lenders Thursday.
“The key changes, which will stay in place for almost two years, include easing the requirements regarding the number of units in a building that can be delinquent on their association dues. Going forward, no more than 15 percent of a building’s units can be more than 60 days delinquent. The previous rule was 30 days.,” according to the story written by Mary Ellen Podmolik .
“Investors may own up to 50 percent of the total units in an existing building or non-gut rehab project so long as at least half of the units have been sold or are under contract to owner-occupants for use as their principal homes. Unoccupied and unsold units owned by a developer will not be considered investor-owned and subject to the requirements unless the condominium is rented or has had a previous occupant.”
“The Community Associations Institute, a trade group of community associations, pushed the FHA to revise the rules,” says HousingWire.
“It was determined that certain policy adjustments were needed to address current housing market conditions,” the FHA said in the letter.
CAI Chief Executive Officer Thomas Skiba said the revisions were needed sooner but is still “excellent news.”
“FHA has responded to the critical issues we’ve raised. By doing so, more Americans can obtain FHA-insured mortgages to purchase condominiums,” Skiba said. “This will spark home sales and help tens of thousands of condominium communities begin to recover from the housing slump, and that can only help the national economy.”
“This is excellent news for sellers, buyers, condominium communities and the housing market across the country,” said Thomas Skiba, the association’s CEO, said in a statement. “We hoped this would happen a lot sooner, but it’s an important step in the right direction. This will spark home sales and help tens of thousands of condominium communities begin to recover from the housing slump, and that can only help the national economy.”
Until Feb. 1, 2010, condo buyers could seek spot approval for FHA-backed mortgages, which require smaller down payments than other mortgage products and thus are considered a good option for first-time homebuyers. But the agency changed its criteria, requiring entire buildings to be certified and based its approval process on a building’s financial viability. Buildings are recertified every two years.
That has caused problems for potential buyers and sellers, as condo association’s financial reserves dwindled, homeowners lost their units through short sales and foreclosures, and the number of rentals in buildings rose.
Our management company and board decided that they were not going to reapply for FHA because it was too time consuming for the management company and they said it cost over 5000.00 for the application process.
What can we do as condo owners to get FHA back in our community????
Most associations hire a consulting firm to do this work. Your management company is correct it is very time consuming, but with the consulting firm all your management company needs to do is forward documents. No paper work needs to be prepared by the management company.
I don’t know how large your association is, but my association 95 units paid $2,500 for the appropriate documents to be prepared and filed with FHA. It took about one month to complete from beginning to FHA approval.
Great job with the post, will share the information as well. Keep up the great work George. Hope all is well with you.
Our condo association Board of Directors in Bridgeport decided not to renew it’s FHA Approval, but never asked the members if it was important to anyone that they do so. People have lost as much as 53% of purchased value in their units. I was told the Board refused to spend $800. on some required documents. At least one owner is going to lose their condo because they were not able to take advantage of an FHA backed modification. Do Boards have a right to make a decision like this without consulting or a vote of the current owners? Another rumor is that the Board doesn’t want poor people owning in the building and it is rumored they believe FHA is for poor people.
Glen Oaks Condos in Newington, CT: Our associaton (New Section) community has 326 units and it took several months to process our FHA…what the detail process was to get there; I do not know; however, we are approved. If you are in question on how long it took and what process our community went through. Call 860.665.9089 to inquire; I hope they can answer questions. I know we had a huge fire here and a neighboring condo community had the same intense fire and our board was able to provide assistance based on our experience. Condo communities helping condo communities.
In addition, here is a suggestion if the board does not want to spend the money for FHA approval. What you can do is when the budget comes up, find out the cost and get it included in the budget because unit owners can vote on the budget. Or try a petition if your bylaws speaks to petitions or get the community to have a meeting to discuss further. I know it can be frustrating; however, from my continued experience, it is perseverance, time and patience that it does pay off in the long run. It is an individual choice for what extent of involvement; however, if you have more numbers; it is stronger! Good Luck!
Funding for HUD was cut so now it’s a DIY process. An active Board can do their own re-certification for little or no money for an existing condo community. If your HOA already had HUD approval and certification, a renewal just requires obtaining some documents and working with a lender who posts the certification on HUD’s website. Search on HUD.gov for “condo recertification” and the online guide is there.
Good luck!
Our Board and the Management company said they would not pursue getting back our FHA status because they didn’t want low income families moving in. I believe that’s called discrimination!! We’ve had two shortsales, three foreclosures and two units that have been on the market for over 6 months. I launched a complaint via email to the Board President and was informed I can no longer email or call the Board or Management Company and now contact needs to be made via US Mail. Discrimination and retaliation for voicing my opinion. Now what??!!
Are contributions to reserves accounts now required in Connecticut? If so, what is the percentage? Thanks!