With the changing times in our housing market came big changes altogether for FHA and VA loan criteria. The biggest stunner was the condo/townhouse complexes that used to be FHA or VA approved; but alas no more.
Don't wait until after you get into contract to get shocked that the condo/townhouse is no longer approved by FHA or VA. Get your homework done and check before you list that property and check before you write that contract for your buyer.
You can get lists of complexes for FHA approved condo/townhouses/homes/communities for any state at this site: FHA approved homes and communities and this site is for VA approved condos.
The owner occupancy rate of 51 % is the biggest determination for the condo being approved as well as the insurance coverage. Ask your lender if they are able to determine project eligibility, review project documentation and certify if that property is not FHA/VA approved.
Be proactive before you list a property or write a contract.
Find out more from a lender and do your homework.
Been there, done that, bought the T-Shirt. lol I had one last year where I wrote the offer, suspicious of the owner-occupancy rate, asked the listing agent, and he said he had just closed an FHA deal in there. Two weeks into escrow, we find out more tenants than termites, Deal fell.
Jean: Well, at least the termites weren't the factor lol
Sally, this is a good warning to put out there, but Condo's that are presently on the FHA List will still qualify for FHA Loans until December 31st of this year if they meet the owner occupancy rate of 51 % or more, there is no pending litigation, and they have at least 10% reserves.
When you go to the FHA Approved Condo Website it defaults to "HRAP/DELRAP" at the top. If you hit the drop down menu you will see "Pre HRAP/DELRAP", that is the list that is in effect until December 31st. However, it is a great idea to look at the HRAP/DELRAP list as well, because if the condo is not on there, those condo management firms and associations need to get on the ball and get there complex re-certified before December 31st or those condo owners might have a really tough time selling their condo after the first of the year.
I hope to do a blog before the end of the month with all that will occur after the first of the year for FHA Condo Loans. One big one is going to be that FHA will not do a loan even if the condo is on the list once they have loans on 30% of the condo's in the complex.
George: This is what I was hoping for...all you loan guys to jump in and give some more info. We are findiing that we can help as well. If a loan officer doesn't do the leg work then we make calls... In the case of one getting denied...it was because of the insurance.
I look forward to seeing you write more info on this topic!
Thanks much George!
Sally - this has been a large problem here with so many condos NOT being FHA approved. Owner occupancy is a problem in many complexes, as is the HOA deliquency. Many investors are buying condos with the lower prices so owner occupancy is gettin geven worse. Not good news for many buyers.
Jeff
Good information. Listing agents need to verify this before they place in the MLS as well as buyer agents before showing if they know they will be using the FHA/VA loan.
Woo Hoo!, There are going to be some very unhappy campers as Fannie and Freddie tighten the reins on condo financing even more. If you think about it, the future is not going to be pleasant. My lender here said that after this year, it could be a very serious problem. I worked with my lender and title company years ago and had a number of subdivisions approved. While that won't help after this year, at least up to now, I did my bit for a number of these communities. Back then it didn't cost very much, mostly time and effort. A whole other issue today. I spoke to a management company representing a large subdivision on Wednesday and the manager made it clear that getting FHA/VA financing approved was not within the scope of duties for her directors. Guess they don't have a clue. And Clueless also does not bode well for their future resales. Sad so many will suffer because there are few leaders in the areana.
Gary: Sure would make it easier so we know where we stand.
William: I'm sure there's more that can be done....in one case the insurance didn't meet criteria...so they called up property manager/association and got them to inquire with the insurance co to raise..in any event...I'm hoping that things will turn around.
Sally - condos down here have a hard time getting FHA loans so we generally just tell everyone either cash or conventional!
Hi Sally! LARGE problem here too--haven't been burned yet, thankfully but, know many who have. It's something that you first check on before ever showing if you KNOW that they're going to be going FHA. (Yet another reason for a pre-qualification PRIOR to putting them into your car!)
Sally - AMEN! I have trained all my buyers about the trials and tribulations of condo financing these days. As you mentioned, so many complexes that USED to be approved have since lost their status. It is absolutely vital that buyers understand the complications of trying to get a condo re-approved and then getting a loan financed in the building. Great post Sally!
Great post ! This really needs to be checked prior to taking a listing and prior to writing an offer.
Sally,
Had 1 condo area in which the owner ratio of 51% was always so close that a single new rental could tip the scales. Often got an exception when that occurred but could never be certain!
I have 3 condos listed right now that have lost the certification. Now marketing for a cash buyer! I definitely am reblogging this informative post. Thanks, Sally.
Great post Sally. Very true for our areas here, especially for condos. Very few of our developments are FHA/VA approved.
The majority of the condo projects in mmy area are not warrantable. Condos should have been a great possibility for first time home buyers but the regs killed that.
The whole fha va condo list is just the starting point. Current conditions have to exist with regard to the insurance, fidelity bond, number of deliquencies, etc. It is important to get the information up front before even putting in an offer.
Thanks for the resource! Greatly appreciated > going to reblog!