The Seattle Condo Blog | Seattle Condos and Lofts

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.

But…

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.

We’ve team 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. Whether you’re a buyer considering purchasing, or an owner thinking about selling in a non-approved condo building, we can help. Contact us to learn more about this special program.

On October 1, 2011 the increased loan limit for FHA Loans expired reducing the limit in the Seattle area from $567,500 to $506,000 for FHA back loans, potentially affecting upper-end purchases.

Last week, FHA got a reprieve from Congress, which reinstated the higher loan limits in 42 states through 2013. For the Seattle/King County area the loan limit is back to $567,500.

Unfortunately, Congress chose not to reinstate the higher limits for conventional loans (e.g. Fannie Mae and Freddie Mac). The conventional loan limit in Seattle/King Country will remain at $506,000.

Most single family and townhomes will qualify for FHA. The higher limit means an additional 92 properties are eligible. Of the 1,709 single family and townhome properties currently for sale in Seattle today, 70.6% are available under $567,500.

Condos are a different story as the building complex will need to be approved by FHA in order for purchases in those buildings to be eligible for FHA loans. Recent changes to FHA guidelines now require condos to undergo recertification every two years, so some buildings that were once FHA approve may no longer be.

As of today, per the HUD website, 408 condominiums buildings in Seattle are FHA approved, which has increased over the past year. Overall, less than half of the condo buildings in Seattle are FHA eligible.

Of the 873 condos currently available for sale in Seattle, 35% or 307 units, are FHA approved. Throughout King County, 42% of the condos units for sale are FHA approved.

>> View FHA approved Seattle condos listed for sale. *

* Subject to buyer verification

We’re happy to announce a new search feature that was suggested by one of our readers. We’re now the first Seattle area online home search site that’ll allow you to search specifically for FHA Approved condos.

Unlike single family homes and townhomes where most properties will qualify for FHA financing, the number of available FHA eligible condos in Seattle are far more limited. Overall, there’s only about 350 condominiums in Seattle that are FHA approved, a relatively small percentage.

A couple of years ago FHA eliminated the spot approval process meaning if you’re looking for FHA condos, you’ll need to locate a building that’s already approved. With our FHA search filter, it’s never been easy to search for available FHA approved Seattle condos for sale.

To search for FHA approved properties, click on the Features option under the Search tab.

Then, check the FHA Approved box.

>> Search for FHA approved Seattle condos

Note, the FHA listing status is reliant on the listing agent. Recent changes to FHA now require condos to re-certify every 2-years, therefore, a building may lose its FHA status during the listing period. Buyers and their lenders should verify the FHA approval status with HUD.

____________________________
© Seattle Condos And Lofts

A couple of informative condo related articles came out this week, which readers will find useful. (click titles to read the full article)

Dues and Don’ts: Condo owners who get behind on homeowner dues could be in for a nasty surprise | Seattle Met Magazine

…your condo association has the authority to foreclose on your unit if you simply fall behind on your monthly homeowner dues. “People always assume that the only person that can foreclose is the bank,” says Valerie Farris Oman, an associate attorney at the Condominium Law Group. “And that’s simply not true.”

New FHA condo financing rules squeeze sellers | Philadelphia Weekly / Inman News

All of the condo projects that ever received FHA approval were going to have to have those certifications expire as of Dec. 7, 2010, but there were so many projects seeking recertification that it created a crush on FHA’s resources to deal with it,” said Kevin Britt, a Seattle attorney specializing in condo and homeowners association representation.

“The FHA extended the deadline based on when the projects originally received approval. The earliest projects were circa 1972 and had to be recertified by Dec. 31, 2010; the other projects (using five-year increments) had longer deadlines

Back in November 2009 when HUD issued new guidelines for FHA condo mortgages, one of the items that many people hadn’t taken much notice about was the recertification provision. Under the new guidelines condos must be re-certified every two years for HUD/FHA approval. Condos that were approved prior to implementation of the new guidelines were given a transition period to obtain recertification…the expiration of the transition period is now fast approaching.

Condominiums that obtained FHA approval prior to October 1, 2008 will need to be recertified by December 7, 2010 or they will lose their FHA approval status.

Fortunately, recertification can be a relatively simple procedure through either FHA’s HRAP or DELRAP approval processes. HRAP approval is done directly with HUD and can take up to 6 weeks; DELRAP is through a direct endorsement lender and can be completed within a week or two, provided the condo conforms to FHA guidelines.

If you own a unit in a condo building that obtained FHA approval prior to October 1, 2008, time is of the essence to secure recertification for your condo building. Losing FHA approval will make your condo less attractive to buyers as FHA mortgages have become increasingly popular option for buyers over the past few years.

The Seattle Condo Blog’s mortgage associates can help you with the recertification process. Mortgage Loan Officer, Dan Keller, outlines and provides important links in his FHA recertification process posting.

Find FHA approved condos: https://entp.hud.gov/idapp/html/condlook.cfm

Update 1/6/2011: For a number of properties (not all) FHA has extended the expiration for six months.

Updated 7/30/2010: Additional 30 newly minted FHA approved condos.

Ever since conventional mortgages implemented additional fees, tighter requirements and acquired a general distaste for condo purchases, it has gotten a bit more difficult to secure a condo loan. Those of us who work the condo market have seen more and more buyers shift to FHA backed financing for their purchases. FHA’s qualification guidelines are a bit more lenient and only require a minimum 3.5% down payment.

Add to that the number of first-time home buyers enticed to homeownership as a result of the tax credit, many condo associations have sought HUD/FHA approval for their buildings. This year alone, over 60 condominiums obtained HUD/FHA approval under FHA’s DELRAP or HRAP program, which means the approval is good for 24 months.

Here’s a list of newly minted FHA approved condos that received FHA/HUD approval this year (as of 7/30/10):

Have a question about buying a condo using FHA or if you’d like more information on getting your condo building FHA approved, drop us a note.

The Ruby (website), Seattle’s newest condominium development in the Eastlake neighborhood, has just completed construction and is celebrating with a Grand Opening event scheduled for the weekend of February 7th & 8th.

Located in the north end of the Eastlake at 2960 Eastlake Ave E, the 5-story Ruby features 52 large one-bedroom and open one-bedroom homes that range in size from 621 to 934 square feet. Many of the homes face West, which provides abundant light and exceptional views of Lake Union, Wallingford and beyond.

Home and building features include:

• 9′ ceiling height with floor-to-ceiling windows
• Slab granite countertops with undermount sinks
• Many homes include an expansive kitchen island
• Whirlpool stainless appliances with gas range
• A/C ready (most homes are West facing)
• Parking & storage for each home
• Courtyard terrace with BBQ area
• Built Smart™ construction

Ruby’s high ceiling height combined with the open layout of the homes create a rather spacious and flexible living space. Plus, homes on the 2nd floor (100-level homes) offer private and semi-private terraces, many of which open to the common roof terrace. For the chef at home, the units provide the prefect gourmet kitchen space, including an expansive island with eating bar. The finishes and appointments are standard for new construction condominiums at this price point and residential amenities are spartan – lobby and a courtyard terrace.

One issue that may come to mind for potential buyers is Ruby’s location to I-5. The building is well insulated and environmental noise is kept to a minimum. Homes on the north side, along East Alison Street, are exposed to the I-5 traffic noise, particularly with the windows or sliders open. Fortunately, most of the homes face Lake Union and are shielded from I-5. With the sliders open in the middle of the day I-5 traffic noise was not discernible over the hum of everyday in-city ambient noise.

Lake view homes are currently priced between $329,990 to $379,990 while the bridge view homes range from $259,990 to $479,990. Homeowner dues are approximately $.44/square foot, which seems high given the lack of residential amenities and services. On the other hand, the association will be well-funded, managed and maintained. The development has obtained FHA approval which will allow buyers to purchase homes with as little as 3.5% down.

Ruby is celebrating its Grand Opening with a special promotion. For the first ten sales, Ruby is offering buyers 3% in concessions. All homes are available for purchase.

Update 2/20/09 from Ruby:
As of today, Ruby has partnered with a local lender (Seattle Mortgage) looking to actually lend money! They have committed to close homes now, ie, we are move-in ready with no pre-sale requirement. We are also working with other regional lenders for additional commitments to close homes with no presale requirements. Ruby on Eastlake is both FHA and VA approved, so buyers can take advantage of every financial opportunity to get into new home ownership.

View available Ruby condos for sale.

[simpleviewer=4,480,640]

A number of new condo developments have obtained FHA approval.  With FHA approval, buyers can more easily obtain FHA financing for their purchase.  Compared to conventional loans, FHA provides low down payment requirements, slightly more lenient guidelines with higher ratios and allows for gift funds.  In King County, the FHA loan limit is $506,000.

Here’s a list of recently completed developments that have obtained FHA approval:

Gallery – Belltown, website

Trio - Belltown, website

Parc – Belltown, website

Blue Heron – Magnolia, website

Danielle – Ballard, website

Noma – Ballard.  Noma is sold out but re-sales are eligible for FHA financing.

Sylvan Ridge – West Seattle, website

Ruby Condos – Eastlake, website (pending approval)

Thornton Place – Northgate, website (pending approval)