HOAleader.com - Tip of the Week - February 3, 2012
Published: Fri, 02/03/12
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Is Your Condo Still Not FHA Certified? What Can You Do?
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In this week's tip, we provide insight for condo associations
still struggling to meet Federal Housing Administration
certification requirements.
The background: The FHA guarantees home loans offered through
conventional lenders. FHA loans allow homebuyers to use a
smaller down payment and sometimes to have lower credit scores
than lenders require for conventional mortgages.
Under rules issued in 2009, the FHA guarantees loans for condo
purchases only if the entire association has been approved for
FHA financing. That has required many condo associations to go
through the FHA's "recertification" process. It's strict, and
many condos haven't been able to pass the FHA's restrictions.
On June 30, 2011, the FHA "consolidated and updated" its
approval requirements through Mortgagee Letter 2011-22 and a
companion implementation schedule and guide.
"Mortgagee Letter 2011-22 is still in effect," explains Lisa
A. Magill, a shareholder and association attorney at Becker &
Poliakoff PA in Fort Lauderdale, Fla. "The FHA has allowed for
certain types of exceptions to its requirements if you meet the
exceptions."
One rule often bars certification. "The FHA won't certify a
property that has more than 15 percent delinquencies, and it
counts delinquencies as those accounts overdue for more than 30
days," says Magill. "That's a major problem.
"The FHA has also modified its rules to include properties or
units taken back by lenders in foreclosure, but lenders never
pay," adds Magill. "Now lenders who don't pay their monthly
assessments are included in the 15 percent calculation. That
kicks out a lot of associations."
There are now exceptions to the 15 percent rule, but those
aren't much easier for most condos to meet. "The FHA has a
whole list of requirements condos have to meet to make an
exception to the 15 percent rule," reports Magill. "You can't
have more than 20 percent of your accounts in arrears for more
than 30 days, but if you're in between 15 and 20 percent, you
can try for the exception."
Find out what you'll have to provide, two more budget issues
that can kick you out of the running for certification, and
whether third party companies can actually help you achieve
certification in our new article:
http://www.hoaleader.com/snip/123.htm
Best regards,
Matt Humphrey
President
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