Hawaii Real Estate | Hawaii Relocations | Hawaii Home Buying & Selling

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!

You surely can't rely on information from the listing agent! Try using that as an excuse when your boss asks you about a problem caused by that reliance. Good luck.

Condo's are tough.  Your information is helpful and should be bookmarked for later reference when a Condo purchase is considered.  Many factors to consider with litigation and owner/occupied ratios being two of the most frequent problems. 

It is interesting that so many will lose their approval.  Another winning rule of FHA and the feds.

This is a common issue here.  We have so many small condos that haven't yet been approved.

Hey, I just noticed the whole time warp thing going on here.  Looks like there are comments from the future...even one from this coming August!  Cool.  I always new AR could do wonderous things.  Now they have added time travel!

Sally,

This is a great topic and worthy of keeping before your condo buyers.

Good speed with your Mililani Real Estate sales,

Steve

Sally,

This is so true!  I found it to be so during my stint doing reverse mortgages.  At one time "spot" approvals were valid, but no longer can you just approve one condo and not the entire complex.  Also, things change and maybe the com;lex was up to date on financials and dues, but no longer because of today's economy.  Thanks for bringing it to everyone's attention!

Yes I found this to be true. I had a listing, a condo, and it was on the FHA approved list per two lenders. I thought I had checked everything I needed to check. Then the offer came in and it was a FHA so I thought no problem. Then we are ready for final UW approval and guess what..... too many homeowners are late on their HOA dues so the UW says FHA will not approve this loan. Switched to a conventional loan but buyer thought maybe the HOA was not financially stable so they pulled out. Luckily there was a full cash offer waiting. This was a very upsetting situation for my seller.

Sally - these are great links to have. We have a lot of issues with FHA and VA approved condos, or lack or. It always seems to be the ones the buyers fall in love with. Bookmarked AND databases added to My Favorites list.

Jeff

The VA approved condo/pud builder page before went dead so this is a new link above. Thanks Jeff...bottom line...even if FHA approved before...may need to reapply again!

Thanks for the good post today.  I enjoyed the read.

Patricia Aulson/Seacoast NH & ME

Hi Sally, I am bookmarking this page for future reference. I lost a deal earlier this year because the listing agent had advertised that a condo was VA eligible, but we found out after submitting the offer that it was NOT. I learned a good lesson the hard way about condos.

Thanks for the nice link.  I will forward to my agents as we run into this a lot nowadays.

This is a big issue with so many distressed properties in Las Vegas. Thanks for the links!

Crossing fingers I have a condo in escrow that is FHA.  No FHA loans closed in the last 12 months and that bothers me.  Lender's telling me it's all good!

Sally, I actually got a call today from a lady that wants me to list her condo for sale...but, it's a TimeShare. You tell me. Should I attempt this one? I have only sold one before. It was ez but this one may not be. Just curious what you would say about this.

Deb...sorry don't touch timeshares :)

Sally, bookmarked this for using the links in your post.

I was surprised to see the 'hours of operation' for this online service when I tried to find about the condo complex of my listing (I know it is NOT FHA approved for some different reasons.)

Thanks to Praful for the reblog...

Good idea to know up front if the condos are approved.  We used to be able to get spot approvals but that is almost impossible now.

Margaret

SAlly -- This is excellent info. I posted the same a few months ago and it needs to be repeated often.  We had many expirations in May.  I lucked out on the condo I am listing tomorrow.  They were NOT approved and JUST got approved last week.  Yes!!

Great post Sally

HelpfulHannah

Thanks for the great post, Sally.  I have made an ongoing effort in my community to reach out to HOA's and property managers and work with them to obtain FHA approval or to tell them what's preventing it.  Surprisingly, there are still very many management companies with their heads in the sand.  Same for HOA boards.  Some think that an FHA approval will only permit the "wrong kind" of buyers.  WHAT??? In this environment they still wish to be exclusive? Unbelieveable.

All that said, if any Realtors in California have a listing or buyer for a condo, I can help with the FHA process if necessary.  Give me a call at 415.367.5959 or rspinosa@rpm-mtg.com.  Getting an FHA approval involves a lot of paperwork and patience, but it is worth it.

This will hurt the real estate market and there will be more short sales and foreclosures if sellers of condos will not be able to sell. Thank you for the information.

Hi Sally, I always check to make sure the condo is on the list. You just never know. It's there one day and gone the next.

Sally, you are absolutely right! Failure to do our homework as agents can cost clients the sale of their home. Knowing what is real about Real Estate when it comes to FHA/VA Loans is of great importance.

Sally, this post has a life of it's own in looking at some of the dates. Some things just never go out of style.

The occupancy ratios of some of the condo complexes, especially in larger towns, can be a real issue. I've lost many an hour looking through town records to verify some of the ratios as some of the managing offices of the complexes are lax about their records. Finding a condo address where the tax bills get sent to a different address is always the first clue, and for some owners they could not be aware of how many of the new neighbors, especially in a large complex are tenants that just lessened their chance of getting their unit sold.

Great advice Sally.  Especially true in Florida where there are quite a few condo associations that are not approved.  (In my area the vast majority are not)

Condos are a different animal from single family houses. Marketing is a bit different, as well and getting all the financing issues covered. Nice job of high lighting some of the big issues Sally.

Ed...I changed the link for the VA condo search yesterday (old one for condo/pud builder was shut down) and it ended up getting featured too!  Through all this I also found that PUD's do not need FHA approval...which was a good thing.

Also, with some lenders (who are savvy in this) will put in the extra work to get them approved. It takes a bit more time but a transaction can close in a matter of a couple weeks.

Sally a lot of Condo's came off of the FHA Approved Condo List at the end of May, and a bunch more will come off at the end of July, so it is very important for people to check out the link that you provided, before they assume that the Condo is still on it.

Another major change that will take place soon is that FHA will no longer do loans on more that 30% of the condo's in a complex.  FHA has started to post that percentage on the Condo Approved List website in preparation for this requirement.

This is a huge issue in my area. There are a couple of complexes where certain buildings within the complex are approved with other buildings not being approved. That's weird, but I guess they don't want issues with certain parts of the community.

sally, great post, i dont know how many times i had to remind myself to check properties out to see if they are approved.  

i also post if its approved or not on my listings and still get the phone call or email from agents; asking if its fha approved?

thanks for sharing!

Oh, I love that FHA site... that only operates during business hours.

It just makes me laugh, it's so illogical.

George: Great info....it's an ongoing change.

Nice post Celeste!  I can't tell you the number of times a Buyer (doing their own public MLS searches) have asked me to show them a unit in a building that wasn't approved.  I have to tell them "there's a reason I haven't taken you to that complex"

Thank you, i think the old link was no good.  and you had the information on the right link.  Thank you.