FHA GUIDELINES FOR ASSOCIATIONS
I see a problem coming on the horizon and I don't have to be a clairvoyant to know that it's going to be bad. In fact, I've started to see little bits and pieces of the problem over the last 6 months or so. Some problems were created a long time ago, others created more recently. Did you know that what your Association decides with your FHA approval and required submission can impact the sale of your home?
Most sellers don't know this has a HUGE IMPACT.
With all the new lending guidelines and restrictions just laid out this year, more and more people will be using FHA financing. It is normally more lenient with credit dings and dents. No major crashes or penalties, but a few minor bumps in the road. Also, you only need a small down payment of 3.5%.
What if your condo management decided not to renew their FHA approval to save a few dollars?
What if your condo management just said 'Nawww, we don't need no stinkin' FHA! That's for losers isn't it?' Well, no it's not. You being a homeowner in that complex is going to make you the big looser. Here's how!
If 60% of people looking for homes are going FHA financing and your complex isn't approved that means that 60% of the buyers won't see your house! Got that?
So that leaves conventional financing and cash - good luck with that cash buyer, not many of those hanging around in the bushes these days! You've got a better chance of winning the lotto, getting a hole in one or getting struck by lightning than someone buying your home with cash!
So while I'm at it, let's talk about other association blunders that I've recently come across:
- Owners suing the association - will make the complex loose their FHA standing.
- Tax liens against the association or common property will make the complex loose their FHA standing.
- Not enough owner occupants in the association creating a huge renter vs. owner mix within the complex. Yep, you'll loose your FHA standing.
- Too many people not paying their assessments - due to foreclosures or just bad collection practices by the association. See ya ..... FHA approval.
This is just another reason to get involved and stay involved with your association. Keeping and eye on your investment (your home) shouldn't be looked at as a problem or a hassle. Just like you lock your car and protect your valuables, attend a homeowners meeting to see what's going on with your budget and management.
Hi Lyn, great insights. FHA condos need all the help they can get. Here in San Diego, FHA offers are considered well after cash and conventional. I always tell my buyers to get involved with the HOA-- thanks for pointing out all the reasons why.
Barb,I think we have lower prices than your area and the need for FHA is greater. Alot of changes happening and owners should be paying attention because it effects their investment.
It is even more scary of you do not know these facts! Thanks for taking the time to share.
FHA is huge in my area as well. At the beginning of the year I ran across a few condo units that were not FHA approved - although my buyers liked them they ended up buying somewhere else.
Ellen: Better to keep an eye on your assn. management and be sure they have your best interests in mind. I dont think many sellers know this is a problem.
Ladies: See, so you know how important it is and being a professional in your own area you know which subdivisions are approved and which are not. Many are becoming 'unapproved' and it is going to make the homes in that area harder to sell.
Hi Lyn. This has significantly affected condos in the Tampa Bay area and am glad that you posted about this because condo owners should get more involved less it affect the sales in their condo later. ~ Lana
Lana, I just don't think people understand what it will do to sales in their subdivision. What is more scary is that property managers are giving bad advice to the homeowners too. There is one subdivision where I inquired about a problem and you could tell the property manager truly did not understand the gravity of the situation. He really didn't understand legally what was going on.
I really appreciate this information. Our particular area doesn't have condos to speak of so I haven't run into this problem, nevertheless, better to know a bit a more about a subject than not enough. Thanks!
Silvia, it depends on your particular area as you say. We have a great variety of multi-family units here and they all have assn's. New changes are going to make a difference and I'm afraid some assn's won't be handling it correctly.