A recent article in the Seattle Times highlights the side effects of changes that FHA instituted for condominiums in February 2010. We previously reported that FHA eliminated its popular spot approval process that condo buyers utilized to purchase homes in non-FHA approved condo buildings, implemented a new approval process and required recertification every two years.
Now, buyers who hope to purchase a home with FHA’s low down payment loan program are getting frustrated that fewer condo buildings are now FHA approved.
For buyers like Kristy Fender, of Chicago, FHA certification is a must-have on her list, and not just because it lets Fender and her fiancé, Dan Harvey, make a smaller down payment on a home purchase. She also figures that in approving buildings the FHA is doing the due diligence that she would otherwise have to do.
That’s amplified by the fact that many associations haven’t taken the initiative to obtain FHA approval, do so poorly, or encounter problems related to distressed properties.
The number of rejected buildings is adding up, due to bad paperwork and bad balance sheets as an increasing number of condo associations struggle with rentals, short sales and foreclosures. It is jeopardizing the plans of condo sellers who rely on the FHA’s stamp of approval as a marketing tool and condo buyers who either want or need an FHA-approved building.
Condo financing has become more complex and challenging for buyers (and sellers) since FHA and Fannie Mae tightened their condo qualification guidelines. With conventional condo loans requiring at least 10% down, FHA has been a favorable option for condo buyers.
Some associations are deciding that the effort and the expenses tied to the application process, which can run into the thousands of dollars, aren’t worth the payoff and are letting their certifications lapse.
It behooves associations and sellers to be proactive with their condo building’s FHA certification, which is more significant now as record low interest rates are encouraging first-time buyers into the market place, many of whom gravitate towards FHA approved condos. And, it doesn’t have to be a complicated process.
We can help.
Whether you’re a buyer considering purchasing, or an owner thinking about selling in a non-approved condo building, we can help. We’ved teamed up with a respected, local mortgage company who will take the reigns of the certification process at no cost to the association, seller or buyer. Conditions apply. Contact us to learn more about this special program.