while the object is not to attract unsavory characters AND IN NO WAY WOULD ONE SUGGEST THAT A FHA BORROWER IS UNSAVORY its that like any government ENTITLEMENT PROGRAM there will always be those who misuse .abuse etc a program

even non government "business" have users abusers etc THE DIFFERENCE IS IS THAT A PRIVATE COMPANY HAS TOTAL INCENTIVE TO RID THEMSELVES OF THE USERS /abusers while the government is by its very nature a magnet for the abusers as abusers also vote and those VOTES GO TO THOSE WHO PROVIDE SUCH "entitlements

hope that helps

I saw your question just recently and even though this was posted in June of 2008, I still wanted to reply to your question.

My consulting company, JaeMac Approved!Consulting, specializes in getting condo projects fully FHA and VA approved. I have had a tremendous amount of realtors, developers, and financial institutions request our services. With the lending institutions going back to "old school" qualifications such as actually verifying income, assets, and debt ratios, FHA has become the shining star of getting a person approved for their financing.

One of the biggest misnomers that I have encountered over the years is that FHA financing is for first time homebuyers with poor credit or "low income" which is not accurate. FHA financing was created to give homebuyers flexibility with down payment sources and an overall view of their credit history not to attract "unsavory" buyers.

In a market like today, condominiums that have unsold units for a length of time, actually brings down the value of the other homeowners units in the building. By having an active condominium development with closed sales helps with property values within the building as well as the comparables which ultimatly helps turn this declining market around.

If you'd like to know further about our services or some of the reasons "WHY FHA", please visit our website at http://www.jaemac.com

Thank you!!

Catalpa gardens ecent price reductions, combined with the first-time buyer tax credit and the availability of FHA-insured financing with as little as 3.5 percent down, must have created a triad of incentive for buyers, because 45 condos at the Edgewater development sold in 60 days.

Sales manager Paulette Rodriguez of Jameson explains: “More than half of the sales are FHA deals, and 75 percent of the buyers are first-time purchasers taking advantage of the $8,000 tax credit.” Almost 90 percent of the 126-unit development is now sold.

ok watch for a year or so and see how this one does and then figure out if at all possible how many of these people might be on other kinds of taxpayers assistance

"only hope is FHA"

stay in an apartment then
and dont blame ( yes you are) your" budget man brother"

he gave his advice based on how well he obviously did

if you turned your life around that is great

But you have NO RIGHT TO A HOME UNLESS YOU CAN TAKE CARE OF IT

we all run into problems and YOU ARE RIGHT WE SHOULD BE NICE

BUT IF by being nice that means some are forced to pay for others housing and autos you would be WRONG

being nice means not putting your burden onto others EVEN THOUGH YOU MAY VOTE IN SOCIALISTS WHO AGREE WITH YOUR POINT OF VIEW

That is being mean and cold to demand that

NEVER EVER ANSWER TO LEFTIST HATERS

Lets see who is really mean and cold and hateful:

The thinking that a person who works and has pride and takes care of themselves and volunteers ( see, no force by brutes)when they can or care to OR LEFTIST WELFARE LOVERS who demand others work hard and give BY FORCE to their agenda

who keep minorities down by keeping them trapped in sec 8 housing and Cabrini green type ( oh , I see, they now put them in townhomes, how nice of them) housing feeding their drug habits and giving them more money when they procreate without benefit of a father to help raise the newborns


NEVER APOLOGIZE OR FEEL THE NEED TO JUSTIFY PRO HUMAN BEHAVIOR FOR THAT OF THE SELF HATING LEFTIST CASTRO LOVERS

Dear Courtney,

There are obviously some misconceptions about me, and you've taken the approach as to make me seem like a cold or mean person.

The fact is, I'm not. I help people with most of my time, for free, and I also give to charity. (Handicapped / Disfigured Children's charities in particular)

However, there's a big difference in charity and federal irresponsibility.

I know that not every FHA borrower is some irresponsible deadbeat. However, as of several months ago, the delinquency rate was as high as 16% for FHA insured loans, and that is probably much higher by now. The bad conventional loans of the past few years have high delinquency rates as well, and I'm aware of that too. Those loans should not have been made either, even without FHA.

The federal government should have no business intervening with the free market. Every time the government intervenes, they make a mess and leave the taxpayer with the bill.

I'm sorry you made bad financial decisions in your past, but you really have to own up to your decisions and realize that government assistance is not the answer...Instead of simply telling people to have a heart. That is a total cop out, Courtney. This has nothing to do with a heart, we're having a logical discussion so let's stay on point.

This conversation will not be derailed by pulling the "have a heart" card. You're telling me that I have no heart because I think people should rent until they have a sufficient down payment? And since when is renting so bad? Rents are very cheap right now and in many overpriced markets, it even makes better financial sense to rent!

Having to renting a home is not a sob story, so please do not play that card. I've seen some legitimate sob stories in this world, and none of them have to do with someone having to rent a home because of bad financial decisions and lack of down payment. There are children in this world without food or even feet to walk on, and you're here trying to make a charity case out of people that want to own a house with no money down.

(Yes, no money down...You can use the $8,000 tax credit towards the FHA down payment, so you can actually get in with just about nothing down)

Anyway, my point is that FHA and their 3% down payment does not make logical sense. They're gonna eventually need a bailout and possibly soon to cover all the terrible loans they've made.

I think we need to have a heart in regards to the innocent taxpayers who keep picking up the bill for irresponsible people, because FHA is going to be hitting up Uncle Sam for a bailout soon and they're probably gonna get it.

(By the way, we could use that money to give to children's charities who actually need it)

God bless you as well, and good luck.

President Joe

'FHA and Walk Away!

Good Morning, Mr. "President" Joe: First of all I only read as far as yours of Oct. 4. and just had to stop to respond.

I am "one of those irresponsible FHA borrowers" (2004). I didn't qualify for a conventional loan. I'm in my 50's, and to my regret, I made some bad choices in my 20's and 30's. However, that does NOT mean that I'm in your "catagory" of IRRESPONSIBLE DEADBEATS.

YOUR comments of Oct. 4th: "If these applicants don't meet the conventional lending standards of a down payment, then they shouldn't be buying...and thankfully, they aren't in my complex.

I don't mean to sound harsh, but sob stories do not justify financial irresponsibility. These people should be renting homes if they don't have a down payment, not owning one. It's foolish and irresponsible for our government to insure and encourage home ownership in the face of all that's happened this decade. We obviously haven't learned anything."

How rude and uncaring can one human being be. Not ALL FHA homeowners are irresponsible. In fact my brother kept insisting when I turned 50 that I "should buy". He also advised me if I put down 20%, I would not have to pay PMI. NOTE: My brother was, is and always will be "Budget Man" and I "was" a free spirit and got caught up on the world of credit and living beyond my means. If I could go back... I would. BUT, that's something that cannot be done - or in this case "un-done". I HAVE become a VERY RESPONSIBLE person and have even become a little MORE budget-minded as time goes. Even when a person turns their financial life around, there are those of us who are still slaves to that past, and our ONLY hope IS FHA. Back to the point. I DID put down 20% ($ inheritance $), but doing this on my own and being a single woman, the system GOT ME! I HAD to pay PMI because FHA requirements are that regardless of how much you pay down - you still have to pay PMI for the first 5 years. NO ONE told me. My realtor got his commission and after all was said & done - THAT"s what he was there for - not to "advise" me or look out for "MY" best interests.

SO, before you go off "labeling" people, you need to "know" these people. Every person is a human being with feelings and desires - and most Americans had or have a dream to "have" something to call their own. You can't do that in a rental... hey, you can't even change the white walls without permission.

I agree with you that there are SOME loans that should have never happened because of poor judgment/misinformation or lack thereof on the part of greedy realtors/brokers/lenders or not so responsible borrowers. That's in the past. Move on.

In closing - another couple of quotes from your Oct. 4 comment:

"If these applicants don't meet the conventional lending standards of a down payment, then they shouldn't be buying...and thankfully, they aren't in my complex.

RESPONSE: I'm not "conventional". I am a homeowner AND a Condo Board member for 3 years now.... and thankfully, YOU are not in my complex. If you were, I'd be keeping a close eye on you.

"I now have the peace of mind knowing that every new neighbor of mine is a responsible one. Good riddance, FHA! "

RESPONSE: I now have peace of mind that my neighbors (save one - who is just like you with the attitude) are caring RESPONSIBLE homeowners with a HEART!!!!

"And by the way, I'm not on here soliciting any kind of service, nor am I a realtor trying to make money and further my own business on here... I'm just telling it like it is."

RESPONSE: What you are "telling" (spreading) is more of what this world can do without - negative, unfeeling and "it's-all-about-me" attitude! Please remember that you and I and every other person on this planet are equal. When we came into this world, we came in naked, penniless and not responsible for a single thing. When we leave this world, we are leaving naked, penniless and not responsible for a single thing. It doesn't matter what or how much you "own" when you leave here. Why not start lending a helping hand, a kind word and a smile to someone... even someone who is down on their luck (there are many). Be a blessing not a curse while you are here. You never know "WHO" you may be blessing (or cursing) and how it will eventually come back to you - and believe me - IT WILL!!!

<>< God Bless You, and have a wonderful Wednesday!

Yes, we all know FHA is an insurer, but their standards are too lousy.

The FHA themselves warned on Sept 10th that their reserves have fallen below the 2% minimum. They're insuring a trillion dollars worth of mortgages with only 30 billion.

There will be an FHA bailout, and you're telling me this will cost the taxpayer nothing?

It makes no difference that FHA costs more than a normal loan. The bottom line is that it gets people into homes that have only 3% down, and that's just not enough collateral.

FHA is basically lending when it shouldn't be lending. (Anyone learn anything from subprime?)

I'm also not the only person in real estate speaking out against FHA. Even the owner of my management company, who is an HOA attorney, also advised us not to go the FHA route. He has enough trouble collecting dues as it is, and he's been doing this for 25 years. All the nice complexes in the area are not FHA approved, and all the lousy ones are. This is not rocket science.

FHA = Buy a house, you can walk away!

...3% is close to nothing

I'm shocked at the amount of misinformation floating around here. FHA is not a lender it's a mortgage insurer. FHA has been in existence for a long time and their INSURANCE underwriting guidelines have been proven time and time again. They're more expensive than private mortgage insurance. They also have harder qualifying guidelines than any other mortgage insurance program. Having your HOA approved is not a disadvantage but a privilege, hence why most condo's ARE NOT approved. Technically speaking it's not even an FHA approval it would be a HUD approval. Having your HOA approved is a selling point because there is a third-party (separate from the HOA) who approves of the occupancy rate and financials.

Buyer's using FHA mortgage insurance are just as committed as a borrower using private mortgage insurance or no insurance at all. Condo associations deteriorate whenever you have a majority of non-owner occupied units - as people who don't own the home have no vested interest in the property. Hence why HUD approval is a sign that your complex is more than likely to be maintained due to the high owner-occupancy rate. FHA just like any insurance company just like any insurer is not interested in paying insurance claims so you can be sure they'll continually adjust their criteria to ensure that they minimize any possible loses.

FHA mortgage insurance is not tax-payer supported. FHA charges a 1.75% UP FRONT mortgage insurance premium. In addition the borrower will pay 0.55% per year (paid monthly) as a mortgage insurance premium for 5 years or until the loan balance is 78% or less of the value. If the borrower stops paying then FHA will pay the lender thereby minimizes the lenders losses so that it could sell the property quickly without further loss. This quicker sale helps to get a new HOA dues paying homeowner in your complex sooner rather than later.

Many of the comments here have been quite ignorant of the truth and borderline discriminatory. I'm dismayed at the fact that there are people managing HOA's who are completely ignorant of the law, financing, mortgage insurance and real estate in whole. Most states require a license to sell real estate, mortgage and insurance but yet let HOA board members go unchecked.

P.S. President Joe, no one "insures" HOA dues and foreclosing borrowers whether 20% down or FHA insured will always ditch the HOA bill considering the lien disappears as soon as the property is foreclosed. That's the risk of buying into a common interest development project. I wish that wasn't the case and that everyone was responsible but it's just not so. If they were HOA dues wouldn't be rising across the country because of the losses the HOA's have suffered. So although I sympathize with your position I have to disagree with your previous statements.

I'll try and keep this brief:

I suppose if you were looking to "sell your condo" right now, then it would be in your interest to take advantage of FHA since it's so popular right now and everyone's jumping on the government gravy train.

However, if you're planning on keeping your property or living in it, I'd stay away from FHA. If these people were so credit worthy, they wouldn't rely on the government to insure their loan. FHA still allows too many irresponsible people into the system.

"But FHA is not lax lending, it's a beautiful program!"

Well, look up the qualifications for an FHA loan. Credit score. Down payment. Credit History. (It's a joke if you ask me) The more I read about FHA, the more I realize how much I don't like it.

If these applicants don't meet the conventional lending standards of a down payment, then they shouldn't be buying...and thankfully, they aren't in my complex.

I don't mean to sound harsh, but sob stories do not justify financial irresponsibility. These people should be renting homes if they don't have a down payment, not owning one. It's foolish and irresponsible for our government to insure and encourage home ownership in the face of all that's happened this decade. We obviously haven't learned anything.

I now have the peace of mind knowing that every new neighbor of mine is a responsible one. Good riddance, FHA!

And by the way, I'm not on here soliciting any kind of service, nor am I a realtor trying to make money and further my own business on here... I'm just telling it like it is.

So Joe, you are saying that those that don't have 5% or 10% are financially disadvantaged? Do you ever shop for something and buy it on sale? Why should you have to put more money down if you don't have to? If you know anything about underwriting, FHA's standards can be difficult.
For members of a condo community, don't you want to have the ability to sell your home to whomever qualifies for a loan? Are you blaming all the foreclosures and problems on those that did conventional financing with no money down and only the ability to breathe as a reason to give a loan. I am willing to bet that you are in community that had more people foreclose as a result of conventional financing than FHA.
What about those people that had lost their job and are back on their feet but can't afford to put more money down? Do those people not meet your standards Joe? What about a recent college grad that wants to buy a condo? Is he/she not worthy to buy if they only have 3.5% down? What about the single mom that can only afford 3.5% down to have a place to call her own? Is she not good enough? What about the homeowner that needs to sell his unit because he/she lost their job? Shouldn't they have the ability to sell their home to someone who qualifies for a loan regardless if its FHA or conventional? Or aren't they worth of homeownership?
An FHA approved project is helpful for buyers that want to use conventional financing as both Fannie Mae and Freddie Mac as well as VA accept the FHA approval. So if nothing else the condo is available to whomever qualifies for a loan regardless of the type.
Somebody who puts down 1.5% more down doesn't make them a better homeowner.

I understand what you are saying, Joe. Would love to talk with you. My email address is Mbmalkin@aol.com. Hopefully, this does not violate Trulia's TOS. If you email me, I will email you back with my cell number. Do you really feel that your development is better off now? Did a lot of the FHA properties foreclose? Can you tell me, specifically, what kinds of problems you encountered as a result of having FHA buyers? Thanks for replying! Any others with similar experiences.....or opposite experiences are welcome to respond!

Myrna

Myrna, you have valid concerns, but the answer the likely scenario is that the homes will sell - just at a slightly lower price. You can sell anything if the price is right.

The lower price will reflect the difference between the 5% and 10% down payment that some can not afford. And that's not to say that 'every single person' is going to need an FHA loan either. It's just the fashion right now, and the FHA gravy train will not last forever.

I wouldn't expect all these bad things to happen as a result of not having FHA. Some of it (renting, delinquency, and lower sales prices) are bound to happen regardless, in the years ahead. If you're thinking long term, I'd keep the 'financially disadvantaged' out of your complex if you can weather the storm. My complex is finally getting better owners buying now, and now the neighborhood is as happy as a clam.

Many Realtors all think I'm crazy, but they're the same people that argued with me that housing would keep going up and never collapse. ;) They aren't economists, far from it. Most of them simply repeat what NAR tells them to... and it's 'always a good time to buy', right?

A Realtor is a salesman hungry for a sale ... remember that.

Myrna,

I sent you an e-mail yesterday, I just want to let you know that my consulting business, Condo Approval Professionals LLC, can help you get your condo FHA approved. I would love to discuss this further with you. I can be reached at steve@condo-approval.com or by phone at (847)293-2962.

Kind regards,

Steve Stenger
President
Condo Approval Professionals LLC

Joe, I understand what you are saying. The question is: Given our present economy, is it likely, or even reasonable, that first-time homebuyers purchasing "entry level" homes will have the 10% down plus closing costs required for conventional financing? Prior to the mortgage meltdown, buyers could purchase a condo with 5% down. To me, this was reasonable and we could easily survive without FHA. But now that conventional lenders are requiring 10% down, the difference between 5% and 10% seems significant to me (at the $180,000 price point). Again, we are an entry level kind of community. Nearly 100% of the buyers are first time home buyers. Part of my concern is that if people in our community need to move, but are unable to sell, our delinquencies and/or foreclosures may increase. Additionally, if we end up with several units on the market concurrently, our values may drop. If unit owners were forced to rent out their homes in order to cover their mortgage and condo fees, our non-owner occupant ratio would increase. I fear this may be a high price to pay just to keep FHA out of our community.

Myrna, you have a good point. There are pros and cons with being FHA approved and you must weigh them carefully.

We must all realize that FHA has become a government tool to artificially keep home prices afloat for political reasons. I don't support FHA (much like I didn't support sub-prime, bailouts, government tampering of rates, or stimulus).

In the short term, yes, you will suffer lower prices without FHA. The true value of homes can only be revealed without government intervention.

However, in the long term, you're better off. You'll only get buyers who actually saved up for a down payment.

I wouldn't buy into any other reasoning as to why someone should be able to defy traditional lending standards so our government can get them into a home that they ordinarily would not qualify for. Let them save their 10% or 20% and then buy into your complex.

* The way it's supposed to be *

My consulting business, Condo Approval Professionals LLC, specializes in obtaining condominium project approval through all of the government agencies. Visit us on the web, http://www.condo-approval.com, to know more about our company and the services that we provide.
We can help your condominiums with the essential FHA approvals that will be needed for all condominium projects, existing ones included.

Kind regards,

Steve Stenger
President
Condo Approval Professionals LLC
(847)293-2962
steve@condo-approval.com

website: http://www.condo-approval.com

As a Realtor and president of my homeowner's association, I am having a lot of concerns due to the fact that we are not FHA approved. Our documents are rather archaic, and we do have first right of refusal, although this has never been practiced. Due to this issue, we have been denied spot approvals. In the past, this really didn't hurt us. Purchasers could buy with 5% down and it helped to insure that we were attracting better qualified buyers. (Somehow, over the years, two FHA mortgages did manage to get pushed through. I was not involved in those transactions and don't know how this occurred.) Ironically, according to the new FHA guidelines to be implemented on November 2, 2009, first right of refusal will no longer be an issue as long as it is not used to discriminate. But, the spot approval process will no longer be in effect and therefore, the entire development will have to be FHA approved in order for FHA mortgages to be granted.

My concern is this: As an entry level condominium, I fear that our units will become unsaleable. Conventional lenders are now requiring 10% down for the purchase of condos. We are priced in the $180,000 range. This would require a buyer to have at least $27,000 for downpayment and closing costs, which seems excessive. It is possible that with a 6% seller assist (the max allowable for a conventional mortgage with 10% down), the buyer would only need about $18,000. An FHA buyer could purchase the same unit with only $6,300 with a 6% seller assist. FHA requires a minimum credit score of 620. FHA mortgages used to have a stigma. They were for first time homebuyers who were purchasing inexpensive homes. I can still remember, back in 2000 when FHA increased their limit to $150,000. Currently, in my geographical area, the FHA limit is $416,000. This is definitely NOT your mother's FHA mortgage. And, I believe we need to remember this.

If our units are unsaleable because we must attract conventional buyers only, and eliminate the largest pool of buyers at our price point, this will have a negative impact on our values, as our units sit on the market. They may even be unsaleable. It seems to me that this would be counterproductive. If unit owners need to sell and can't, we may experience additional defaults on our monthly condo fees and more foreclosed units. Some of these unit owners may then need to rent out their units. This is not a good thing, either. Currently our invester ratio is at about 5.3%.

I think that as we move forward and evaluate our options, we, like all other non-fha approved condo developments, must weigh risk against reward. In our market area we are probably seeing about 50% of all loans going FHA. Many are strong buyers who just don't want to pull their money from investment accounts at this time. If we continue to eliminate these buyers from our pool, I fear we are just shooting ourselves in the foot.

It comes down to this:

Do you want to adhere to the old adage give a man fish he eats today; teach him to fish he eats forever

the leftists will search high and low to find a "success' story for government welfare state but it always falters in the end

HOW MANY PARENTS TEACH THEIR CHILDREN TO not work hard to sit in front of the tv and do nothing

you're right some do and those are the people we dont want to support

thats it case closed

You have it backwards. 'Skin in the game' did not lead to our financial crisis. It was the opposite. 'Not having skin in the game' created the crisis. When the government guaranteed mortgages, it allowed people to abuse the system and basically gamble with the house's money. Securitization: Wall now street joins in, and we've got a giant conflict of interest, fraud, artificially low interest rates, and then a housing mania that was even promoted by our politicians.

FHA is merely another attempt by the government to artificially prop up housing by loosening (reasonable) loan qualification standards. We have to learn our lesson and let the free market operate.

Getting in with 3% is not good enough, no reasonable lender would take that bet - that's why the government is here to prop prices up.

We have FHA no more, and my complex is happy with the new owners coming in. They're responsible 'savers' with a good down payment, and we're happy with that. The place has really turned around.

Skin in the game....I am amazed that most of the responses on here make it sound like an FHA buyer is only going to put down 3% if you look at case studies 75% of FHA buyers put 10-20% down. Skin in the game is a funny comment in that anytime some puts money down they are putting a foot forward. Not to mention that to get and qualify for an FHA loan has always been more difficult than a conventional loan until recently, which now people have to put a much higher percentage down to get a “conventional loan”. If you are looking purchase or sell a unit in a condo, right now in Sept of 09 and you do not have FHA approval you drastically cut potential buyers by more than a 1/3. Not to mention that all of there income is verifiable, which means they can show there ability to make payments on the loan… As Grace comments below conventional (skin in the game) loans are part of what lead to our economic crisis. Before you make outlandish claims about FHA loans you really should study up on what you are talking about.

President Joe also brings up an interesting point…
“But the agency has faced mounting concerns on Capitol Hill that it will soon need a taxpayer bailout. As of this summer, about 17 percent of FHA borrowers were at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association.”
By interesting I mean if you check this stat against conventional loans 73% of conventional loan borrowers have been 1-3 months behind within the past 18 months…that is a significant difference…but hey who’s keeping track…

By the way an FHA loan is also the only assumable loan in the United States which means a seller, can down the road transfer his % rate to a new buyer. (Rates will go up as history shows us)
Also President Joe check out the LA Times April 19, page B11 since I know your in Los Angeles maybe reading an article written in your home town will help shed some light for you…

In regards to FHA default - I just found this quote from a Yahoo News article which quotes the Mortgage Bankers Association.
----------------
But the agency has faced mounting concerns on Capitol Hill that it will soon need a taxpayer bailout. As of this summer, about 17 percent of FHA borrowers were at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association.
-----------------------

It would be better for the association to avoid FHA application.

People actually should be required to make a bigger down payment than just 3%. You WANT responsible homeowners that were able to save for a down payment, not ones that rely on government assistance.

You want homeowners that have skin in the game. It's easy to walk away when you've put close to nothing down on your home.

Have we not learned anything in the last 5 years?

Grace is right about most of the foreclosures were/are from those who received 100% financing without any of the underwriting checks that should have been in place. If you could breathe you could get a conventional loan and not have to verify income, assets, etc. The mortgage foreclosure rate is lower for FHA loans.

Having said that, FHA's project standards aren't so rigorous that you shouldn't consider it. If your project is FHA approved the homeowner's have the ability to sell their home to whomever qualifies for a loan. They are not just limited to conventional loans.The maximum mortgage limits have increased over the past 2 years so many more condos qualify for FHA financing. Also, during these tough economic times FHA only requires a 3.5% down payment. Conventional condos require at least 10%. With FHA, sellers can contribute up to 6% toward closing costs, etc. FHA approval is also accepted by Fannie Mae, Freddie Mac, and VA.

I have a consulting business that specializes in getting condo projects, of all types, approved by FHA, Fannie Mae, Freddie Mac, and VA. I have over 16 years of national project approval experience and can help you and your association get approved. There are many lenders and brokers out there that don't know the project approval end of things very well. As a result, they give out incorrect information. I have seen it countless times. That is where someone, like my company, can give you the correct information and help you and your condo association.

I would be happy to discuss this further with you if you would like. There are many lenders and brokers out there that don

Sincerely,

Steve Stenger
President
Condo Approval Professionals LLC
(847)293-2962
sstenger@foxvalley.net

Hello Stephanie and thanks for your post.

Once the community has been built and there are homeowners within the buildings, it is usually close to impossible to get the entire community approved for financing by FHA. The reason is that its usually pretty difficult to get occupancy, delinquencies and reserves to the levels necessary to meet FHA rigorous guidelines. There are some mortgage brokers skilled enough (and I suspect Michael Wallace is one of those brokers) who can get a spot FHA approval to allow for a home sale to a buyer who must use FHA loan.

I find it interesting, however, that so many home owners and those representing homeowners associations cite FHA buyers as the reason for delinquencies, foreclosures, government bailouts, etc. All of these comments are either incorrect or unsupported.

As Jon stated below, most of the defaults of late have been with those homeowners who purchased using "conventional" financing that is either sold or guaranteed by Fannie Mae and Freddie Mac. This is the reason that both Fannie and Freddie almost went bankrupt--so many of their loans were defaulting, that the entities could not cover the losses. J, the government's own "bailout" plans for mortgage holders affected only conventional buyers (those with Fannie loans) and never once provided guarantees or help to those buying with an FHA loan or who currently have an FHA loan. And many, Presidet Joe, of those defaulting now had as much as 20 percent equity in the home before the market fell, so the 20 percent down payment has not slowed the rate of short sale or foreclosure transactions.

As for FHA's loan programs--it is not a program intended to help indigent Americans; it provides funding to those who are new to the home market, and may not yet have accumulated funds for a down payment. It was NOT intended to help those who are or were unqualified to purchase a home, suddenly be able to buy a home. At present, only those home buyers who have not owned a home in more than one year, who have a FICO mid score of at least 620 (for low balance) or 660 (for a high balance) can qualify. FHA checks income visa a vis two years of certified tax results from the IRS, and they also make certain the property being purchased is, indeed suitable for habitation. Also--and this should not be overlooked--FHA loans do not have to comply with HVCC appraisal rules, so the home values are proving to go up slightly with an FHA appraisal versus an appraisal for a conventional loan due to the more rigorous requirements of HVCC and the 'trending" element required for all valuations under these new rules. So there are plenty of reasons to look to FHA buyers with fresh, and hopefully, open minds.

Finally, I find it interesting--as an Association Manager--that anyone would claim that the Board or Association knows who has an FHA loan and who does not. In fact, neither the Association Manager nor the Board of Directors is ever provided with this information, so we cannot tell if the person who just defaulted on their loan (and their homeowners association assessments) bought the house with a Fannie backed or FHA backed loan. So while I'm certain President Joe feels that FHA buyers have been the bain of the Association's financial and operational woes, the truth is--because we are never told who is backing the loan--Joe's comments are strictly speculation and he cannot prove it unless he's checked the loans of each of the buyers. Even in default, we are not told who guaranteed the loan--only that the name of the bank holding the mortgage. So while I am certainly not trying to belittle President Joe's angst over their Association's problems, I know that defaults and homeowners issues come wrapped both in an FHA purchaser as well as a conventional loan purchaser blanket.

I think, in order to truly have a discussion about the merits of the FHA loan program or whether a community should look to FHA, it's probably in the Association's best interest to consult a qualified and educated loan broker to help divine fact from fiction, or, in this case, misconception. You can start with Michael Wallace on this site, and if he cannot help you, I'm certain he can find someone in your area who can assist the Board and your members in having a fruitful and frank discussion in this matter.

Sincerely,
Grace Morioka, SRES, e-Pro, CID Expert/Consultant
Area Pro Realty
San Jose, CA

To those in favor of FHA lending who dont get it:

Its NOT JUST ABOUT what the failure rate is, on why many DO NOT want FHA to occupy their "investment" or where they want to reside in peace and quiet

Its that people who are subsidized or paid in full via taxpayer/government assistance are more likely to not take care of a place as well, or might have friends that are of a dubious nature

So a person who has a lower standard to qualify can also fall into a category where they personally have less to lose if they have to leave for whatever reasons

ANY GOVERNMENT PROGRAM WILL ALWAYS HAVE A STINK TO IT

Thats one of the reasons its impossible to find out who is getting our money to buy homes etc

IF ITS OUR MONEY WE SHOULD KNOW BUT THATS NOT GOING TO HAPPEN in a corrupt system

From Fannie Mae website:

"Fannie Mae requires that established condominium projects consisting of attached units have an owner-occupancy ratio of at least 51 percent at the time the loan is originated (purchase or refinance) if the mortgage loan being delivered is secured by an investment property. Established projects where borrowers will occupy the unit or use the unit as a second home are not subject to any owner-occupancy ratios."

Michael has some accurate information. However, those same things such as the 15% delinquency is the same for Fannie Mae. Fannie Mae's pre-sale and owner-occupancy requirements are actually 70% and not the soon to be 50% of FHA. FHA will also now allow 50% of the 50% pre-sold units to be owner-occupied. Therefore, if 50% of the project or legal phase is under contract only half of those, or 25%, need to be sold to owner-occupants.
The 30% concentration is accurate, however, that is expected to be increased when the new mortgagee letter comes out, which will happen anytime before October 1st.
The FHA approval can also be used for Fannie Mae and Freddie Mac loans. With the FHA approval you therefore have a 3-in-1 approval.
With FHA approval you only have to meet the pre-sale/owner-occupancy requirement of the FHA and not Fannie.
I hope this helps.

I'll let you decide. Let me clear up a couple of facts.

First, your building will first have to qualify for FHA. Some of the criteria include not having in excess of 15% of homeowners more than 30 days in arrears in paying their assessments. Also, FHA requires a minimum of 50% owner occupancy.

Another fact is that if your building is approved, FHA will allow no more than 30% of the units to use FHA insured mortgages.

FHA requires the lowest down payment available: 3.5%. But buyers can still put as little as 5% down along with PMI. So realize that even if your building is not FHA approved, some owners may still have a relatively small amount of equity. A Fannie Mae mortgage does not mean 20% down.

It will not hurt. It will help keep your building occupied because FHA purchasers only have to put 3.5% down. The default rate on FHA mortgages is not worse than conventional because they don't have the easy lending programs that conventional mortgages offer. My company can assist you with the FHA approval. I am an independent consultant.

There's a valid reason why banks have always required 20% down. I don't see why Realtors can't understand this simple concept.

Think about it some more and you'll start to get it.

President Joe and a few others below,

WOW...I've never read such a uniformed response. FHA default rates are a 1/5 of what is currently happening to conventional loans. It also allows for more buyers to be attracted to the complex in general…Math people a $500,000 loan through fanny needs $100,000 down or no deal. The same loan under FHA needs anywhere from $15,000 and up. So anyone that can look at merely these two facts and still think this is a bad idea, simply has no need to ever sell there unit, therefore they can sit back and make fictional claims. Do some digging instead of asking a bunch of people their opinion, numbers don’t lie. Check out the HUD site as well as http://www.getfhaaproval.com. Then come up with a real “fact” not a opinionated answer…again WOW!

I don't think Heidi understands economics.

There's a valid reason why homeowners should be required to put 20% down. When the homeowner has skin in the game, it greatly lowers the risk of default. The free market sensibly requires a down payment, and always has. But now the government is trying to almost remove this requirement to keep home prices artificially afloat.

The last thing you want is the government allowing people with lousy credit to get into homes for close to nothing down. By the way, the government does NOT ensure HOA Dues. * Red Alert *

When the owner can't make their payments, their HOA dues go delinquent, and so does the financial condition of the complex. If they foreclose, the HOA loses any hope of getting those dues back since the lender is the only one insured.

My complex does not have FHA anymore and I'm finally seeing financially responsible people move in, as opposed to government assisted people. Dues are being collected, and the place has actually improved significantly. Homeowners thank me all the time, for getting things in order and making responsible decisions.

It is true that many buyers will naturally be priced out of the market without FHA - but overall, you end up with lower default rates and a nicer complex...which in the long run, is better. 'Not having FHA' naturally ensures financial integrity - the way things are supposed to be. Everything else is just a short-term bandaid.

Why do you think it is that the nice complexes are not FHA approved but the lousy ones are? What quality of homeowners live in each one? Do financially sound people rely on government programs to keep them housed? If they do, should they be living in your complex and not paying their dues? (Look up the FHA rate of delinquency for yourself, and realize that the situation is even worse when it comes to HOA dues).

This is all common sense. FHA is similar to subprime, if you think about it. Did we not learn anything from that lesson? People who can't naturally afford a home without the government helping them, shouldn't be buying one.

I predicted the housing bubble many years ago, with great accuracy . Every Realtor used to think I was the crazy one. Realtors usually don't know anything. NAR can never be trusted or believed, and Realtors simply echo what NAR tells them to say, like parrots.

No offense, Heidi, I'm sure you know how to fill out Real Estate forms all day long.. But I'm afraid you don't understand economics.

Yes, you should absolutely do it, and ignore what some of these idiots are saying, especially the "president" of the homeowner comment who obviously has no idea what they're talking about.

First, FHA delinquency rates are 1/5 of those on conventional loans.
Second, FHA has always and still is a full doc lender, which means they didn't fund any of the stated, neg-am, toxic mortgage products that have wreaked the havoc on the industry and property values.
Third, there isn't a MI company that will write on condos at least in California, so the minimum down payment has to be twenty percent.
Fourth, by not being FHA approved, you are eliminating 95% of the buyers who could possible purchase your condo because they don't have the 20% down payment, which will result in your condo being on the market longer, which NEVER results in a higher price.
Fifth, the same underwriting guidelines for conventional loans that hamstrings buyers, also is detrimental to the current owners if they wanted to refinance. For example, fha allows a cash out of 95%, as opposed to 75% for conventional loans, So current owners if they wanted to cashout or do a straight rate and term refinance HAVE TO HAVE A 20% greater equity level to refinance. Not to mention that the minimum FICO for conventional loans is 720 on a condo, and 620 for FHA.
I will tell you that it is ignorant and STUPID NOT to be fha approved, but as you can tell from many of the posts, there are plenty of people out there that are.

FHA is bad for a complex. I'm the president of an HOA.

Everyone on this site is probably a Realtor, and of course they're going to want FHA, because it's in their interest to close the deal. Sure it may prop up home values in the SHORT TERM, but having FHA is not good in the long run for the HOA.

FHA is bad because you have MUCH higher chance of getting delinquent borrowers who don't pay their HOA dues. Do some researche and see how many of these FHA loans become delinquent, the data is everywhere. And believe me, they're going to pay their mortgage bill before they pay their HOA dues!

Oh, and since their mortgage is most likely upside down, the HOA can't foreclose on them because now they're just a liability on your hands and your delinquency dues are piling up.

If you want to keep your complex up in value LONG term, you don't want to invite FHA. The market will turn around some day on its own, and you don't want to turn your complex into FHA-ville.

Condo management offices could do Spot checks on a case-per-case basis, no? When a contract comes in, if the building has barely any foreclosures and is 20% or less TENANT-occupied there is really no reason an INNOCENT buyer should be required to place a whopping 25% of his/her already economy-tight savings into a $100,000 to even $300,000 condo when they have good credit, and it'sot their fault the country is in default. THEY shouldn't have to pay, as long as their mortgage is sound and goes by the new rules , isn't tricky or illegal like a lot of "creative" financing which happened during the boom, right? Each purchase is different and should be treated that way. For example, the VILLAS of PINECREST adn PALMS of PINECREST are NOT distresses buildings in general; just a spot few units in foreclosure. Mostly owner-occupies, and sought-after places due to the A+ Palmetto/pinecrest schools-this FHA-non-approval is killing EVERYONE-realtors, schools, buyers, sellers. This has to change. You may write to me ingridforflorida@gmail.com
Ingrid Hirschhorn Ocean View Int'l Realty with suggestions or Buyers who believe we can get a contract approved properly based on your credit-worthiness or other. 305 740 7348 thank you. I look forward to working with you buyers and Sellers. je parle francais.

I would only think it would help the building. I don't see how it would hurt. It opens up a bigger pool of buyers to the project.

FHA financing is most popular when conventional mortgage markets are suffering. FHA financing can have a loan to value of 97% of the purchase price, which is hard to find in the conventional markets currently. If your building has not been FHA approved at the onset (by the developer), a Spot Approval can be done through a lender with a questionnaire from the association. The association will have to be very prompt with this document as to not extend financing delays. Greg Zaccagni's previous answer is very thorough and I also advise check out the links he posted. Many Developers are currently pursuing FHA approval. It is my understanding that the approval process is taking longer because of the flood of request from developers trying to expand the reach of their products to buyer who need FHA financing. All the new developments I have worked on through the years have been FHA approved to make sure that there is a full spectrum of financing products available to buyer. This has been especially useful over the past 18 months. Many buyers in our developments who were pre-approved with conventional financing have shifted to FHA because of interest rates, down payment concerns, and just better availability of products.

FHA financing is most popular when conventional mortgage markets are suffering. FHA financing can have a loan to value of 97% of the purchase price, which is hard to find in the conventional markets currently. If your building has not been FHA approved at the onset (by the developer), a Spot Approval can be done through a lender with a questionnaire from the association. The association will have to be very prompt with this document as to not extend financing delays. Greg Zaccagni's previous answer is very thorough and I also advise check out the links he posted. Many Developers are currently pursuing FHA approval. It is my understanding that the approval process is taking longer because of the flood of request from developers trying to expand the reach of their products to buyer who need FHA financing. All the new developments I have worked on through the years have been FHA approved to make sure that there is a full spectrum of financing products available to buyer. This has been especially useful over the past 18 months. Many buyers in our developments who were pre-approved with conventional financing have shifted to FHA because of interest rates, down payment concerns, and just better availability of products.

I am so frustrated with a condo complex in Mukilteo, Washington called the Hamptons. The sellers values are dropping like flies because the property managment company is not pushing the hoa to move towards compliance. These are entry level condos in a very desirable area/. Who wants to list the impossible properties. Not me. I have already lost one listing, and I have another seller begging me to list the property. I have called all other listing agents with properties in the complex to write a letter from all of us stating our concerns for the home values. This is tough market anywhere you live, and we are considered on of the better markets and its not great.. HOA's wise up do the math.. My market yourself right out of an entire buyer pool in FHA and VA...

FHA approval for a condo is a good thing to have in today's market. Spot approvals can be done however would you want to change the status to your home sale listing to "pending" and loose other potential buyers waiting for the answer?

Here is a link to already approved condos. Perhaps it would be a benefit to compare them with your own?

https://entp.hud.gov/idapp/html/condlook.cfm

Here is a link to review the condo approval guidelines however please note that IL is not included on this list so there may be some slight differences.

http://www.hud.gov/local/tx/library/archives/2005-07-11condo.cfm

Absolutely not----FHA has been around a long time---maybe not as popular in the last 6-8 years because of the alternative financing---but it will be around a long time in the future-----Usually the only thing in condo decs that "blow" FHA financing is the right of 1st refusal verbage----FHA financing also keeps the numbers up concerning owner occupancy levels---they use to pull FHA if the rental vs owners went over 30%---so owners had to occupy at least 70% of the complex. I would be very glad to see more FHA and VA appd complexes-----sometimes you also can get spot approvals. Fha approval would benefit the complex!!