Home Buying in 33433>Question Details

Audrey Viola, Real Estate Pro in Boca Raton, FL

Some condo communities do not allow FHA loans ..why ?

Asked by Audrey Viola, Boca Raton, FL Fri Oct 12, 2012

Have a buyer wanting to use FHA on a short sale in a community where I am a board member ..What are the pitfalls for the condo association and/or realtor ?

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Simple it is another way to spell prejudice and underline class warfare for the fittest.
Look peple that buy with little cash makes them a liability.
In plain words they have no skin in the game.
How do you expect to keep their feet to the fire when property values go South and their mortgage values are more than their property values.
Given the choice they walk. Leaving many of the communities skipped on their maintenance.
It takes months or even years to spread the expense to the other owners. Yes there seems to be some improvement in helping condos recup their monies from banks who uptill now were no help.
Today associations can excercise the same rules and force banks into foreclosure.

How does that help people with a FHA loans? Not much unless they make it a Federal Case. I am not suprised if it is not already in the works.
It boils down to ask how is it that FLORDA IS NUMBER ONE IN FORECLOSURES.
Owning is not a recreational pass time that comes to all . Renting is no shame. Buying when you have no money is as stupid as the ones that give you the right to drive without a license.
1 vote Thank Flag Link Fri Oct 19, 2012
Great answer! Right to the point.
Flag Tue Sep 15, 2015
Not sure that's entirely true as USDA loans are 100% financing and have some of the lowest default rates among ALL mortgage programs available today..Fact. This includes some higher down payment Conventional loans... Go figure. The reason is real world DTI limits and a two tier approval process.

http://www.UsdaMortgageSource.com
Flag Tue Jul 28, 2015
What a distastefully arrogant response. As a real estate or mortgage broker you are woefully misinformed.

First, Florida wasn’t even in the top 5 for foreclosures when you wrote your post and never beat out Nevada as the foreclosure capital. That you decided you needed to scream that little non-factoid is a bit odd.

By the way, It’s recoup, not recup and pastime, not past time.

Although you are correct in that "owning is not a recreational 'pass time' (sic) and renting is, indeed, no shame, your arrogance in assuming that FHA borrowers are riskier than others is mind blowing.

As a broker, one would hope that you would know that FICO has found that people with 800-plus FICOs and 900-plus Vantage scores — are statistically more likely to default strategically than those with lower scores.

The only "liability" I see here is you, peering down your elitist nose at folks that want to purchase a home and need a little help. I pity anyone that gets stuck working with you.
Flag Tue Sep 3, 2013
Good point that I also have thought of before. However, even though FHA would approve buyers with a low down payment (therefore not enough skin in the game) ?will a bank approve that low downpayment loan in 2013... I would doubt it - unless they want more forclosures again, in the future...
Flag Tue May 28, 2013
Dear Audrey,
Simply put, either the developer has not sought the appropriate approvals or cannot meet the regulatory requirements to obtain approval. Here are just a few of the requirements:

1. Minimum number of units: Projects must consist of two or more units.
2. Insurance Coverage: Projects must be covered by hazard and liability insurance and, when applicable, flood and fidelity insurance (See Section VI, Insurance Requirements).
3. Right of First Refusal: Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation at 24 CFR part100.
4. Commercial Space: No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogenous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.
5. Investor Ownership: No more than 10 percent of the units may be owned by one investor. This limitation also applies to developers/builders that subsequently rent vacant and unsold units. For condominium projects with ten or fewer units, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete.
6. Delinquent Home Owners Association (HOA) Dues: No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payments.
7. Pre-sales: At least 50 percent of the total units must be sold prior to endorsement of a mortgage on any unit. Valid presales include:
• Copies of sales agreements and evidence that a mortgagee is willing to make the loan1
• Evidence that units have closed and are occupied; OR ;
• Information from a developer/builder that lists all of the units already sold, under contract, or closed (e.g. a spreadsheet, chart, or listing used for the company’s own tracking purposes) that is accompanied by a signed certification from the developer (Attachment F).
8. Owner-occupancy Ratios: At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.2 For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).
9. Legal Phasing: Legal phasing is permitted for condominium processing. It is recommended that developers submit all known phases for initial project approval. FHA will not accept market phasing in

For the complete list, visit:http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/fi…

Always a pleasure!
Jen Sommers


Jennifer Sommers, Nestler Poletto Sotheby's International Realty
One South Ocean Boulevard, Suite 11 ⃓ Boca Raton, Florida 33432

O. 561.235.7777⃓ C. 786.390.9299 ⃓ F. 561.997.2614
Jen@AgentBoca.com ⃓ http://www.AgentBo
2 votes Thank Flag Link Mon Jun 3, 2013
If you'd like to purchase a Condo/Townhome with FHA financing, then you'll need to determine if it's Approved by HUD. You can click here to determine if a subject property is Approved. It may be possible to Approve the Condo/Townhome. The Lender may be able to do an Approval based on a DELRAP or the HOA can go direct through a process called HRAP. It takes time to complete the process, but it can be done.

Check this site to find out which condos are FHA approved: http://fhamortgageinfo.com/
1 vote Thank Flag Link Thu Jul 23, 2015
What are if any disadvantages of Townhome association loans for neighborhood repairs?.
0 votes Thank Flag Link Tue Sep 15, 2015
What are if any disadvantages of Townhome association loans for neighborhood repairs?.
0 votes Thank Flag Link Tue Sep 15, 2015
I was surprised to see my question here > I asked it about 9 months ago..but it's still a good question because it explains a lot to potential buyers on why we don't accept FHA in some communities. And those are all really great answers guys ! . Thanks !
0 votes Thank Flag Link Wed Jul 24, 2013
The question asks WHY some condos don't allow FHA loans, not whether they qualify or not... It just so happens that many condo associations don't want to risk what they consider to be risky buyers (with low downpayments), plus they don't want to put up with all the FHA rules/restrictions!
0 votes Thank Flag Link Tue Jul 23, 2013
I wonder why the link for the list of FHA approved condos - for Florida - isn't working...

People who are looking to buy FHA approved condos must be very annoyed....
0 votes Thank Flag Link Tue May 28, 2013
In South Florida, there are very few condo communities on the approved list for FHA or Fannie Mae. Since lenders ultimately need the approval of these organizations to sell their loans, they are not willing to lend on unapproved communities. Be sure to check if a community is governed by a condominium association or a homeowners association. Most properties in condo associations in Florida are difficult to finance. Properties in homeowners associations in Florida are more likely to qualify for FHA and HomePath financing. I am currently trying to help a buyer obtain financing on a coach home in Boca Raton, even though it is a HomePath property. I have spoken with several experienced mortgage brokers and loan officers who say that underwriters will not accept condo loans, even on HomePath properties.
0 votes Thank Flag Link Sun Nov 11, 2012
Hi Audrey,
As stated there is a certain owner occupancy ratio required to obtain FHA loan for that complex, some of them can be added to the list if the mortgage broker does a little work to see ratios changed. If you buy a Fannie Mae foreclosure condo and use the HomePath financing for owner occupant they will waive the requirement, The pitfall is for both Realtor and association is it makes this a hard sale to find a cash buyer or investor with large downpayment. If you are looking to purchase I can search unit that might suit your needs, feel free to contacxt me.
Best Regards,
Russ Greenberg, Realtor, ePro, RELO
561 445 8782
Flahomemover@aol.com
Keyes Real Estate, Mortgage, Title, Insurance, Concierge service
0 votes Thank Flag Link Fri Oct 12, 2012
Additionally, FHA will not allow more than a certain percentage of non-owner occupant owners; one owner cannot own more than a certain number of units in a condo development (the number depends upon the total number of units in the condo); the condo must have what FHA considers to be 'adequate reserves' based upon the number of units in the development; the condo cannot have more than a certain percentage of units which are '30+ days past due on HOA fees' ....and more. Additionally, condo developments must 'apply' to become approved for FHA financing to be placed on the published list of 'approved' condos. So in addition to the other remarks discussing FHA requirements, there is quite a long laundry list of requirements and compliances that must be met so its an involved process that some condo boards simply do not want to open themselves to dealing with!

Eloise P. Wexler, II
CDPE, BPOR
The Pier Group, A Real Estate Company
561-305-1108
EloiseWexler@Gmail.com
0 votes Thank Flag Link Fri Oct 12, 2012
Audrey,

FHA designations were scheduled to expire on more than 25,000 condo buildings nationwide as of the end of September, and only about 8 percent of those have been re-approved for the government mortgages.

See article:
http://articles.sun-sentinel.com/2011-11-27/features/fha-con…

I live and work in the condos on A1A... a full time resident almost 25 years.
Gary (561) 306-7653
Web Reference: http://www.garyyoungman.com
0 votes Thank Flag Link Fri Oct 12, 2012
Some associations have minimum downpayment requirements for their
approval of new owners . The low downpayments allowed by FHA may be a
reason. But more likely the lack of current status as an approved FHA Condo
and jnability to meet FHA requirements for same would be the most common.
As far deal specific concerns there would be the Minimum Property Standards
required for approval . Many Short Sale situations would not have the flexibility
in the deal to remedy MPS issues.
FHA is a great program,but not for use in all situations!



Bob Brubaker Highlight Realty Palm Beach County Fl.
Web Reference: http://www.pbc-realcam.com
0 votes Thank Flag Link Fri Oct 12, 2012
Dear Audrey,

There can be many reasons and some are a) it will open the market to potential buyers that can qualify with less stricter guidelines, less down payment, b) the condo does not meet the FHA guidelines, then odds are it's a non-warrantable condo. Check this site to find out which condos are FHA approved https://entp.hud.gov/idapp/html/condlook.cfm?CFID=16335332&a… . Good luck!

Nitza Ramos
Realtor & Lic. Community Association Manager
East Coast Realty Group LLC
Direct: 954-856-3156
Fax: 954-934-9530
Website: http://www.nrcv.com
**Blog: ask4realtor.blogspot.com
0 votes Thank Flag Link Fri Oct 12, 2012
it's more that they haven't applied to get FHA approved. Don't know that there are any pitfalls for the assoc or the Realtors as long as the appraisals come in OK
0 votes Thank Flag Link Fri Oct 12, 2012
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