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Ethical Dilemma for FHA Condo Buyers? What would you do?

By Karen Deis

Education & Training with ApartmentToolKit.com

January 13, 2011 09:29 AM

Here's an ethical question for you-if you have a buyer purchasing a condo and getting an FHA loan!

As you probably know, FHA (in its infinite wisdom-sarcasm here) had come up with a magic date of December 7, 2010 to get ALL the condos in the world (I mean the US) re-approved by that date! So they came up with staggered dates, depending on when the project was "initially" approved (see chart below)

While the extended dates may help sell a couple more condos, the sad reality is that all the project will need to be re-approved or lose their approval, leaving unsuspecting buyers owning units in projects that are no longer FHA-financing friendly.

Now for the question-

What should you disclose to the buyer? And what would you do/write to protect yourself from lawsuits?

Initial Project Approval Dates Current Expiration Date New Expiration Date

1972 - 1980 December 7, 2010 December 31, 2010

1981 - 1985 December 7, 2010 December 31, 2010

1986 - 1990 December 7, 2010 May 31, 2011

1991 - 1995 December 7, 2010 July 31, 2011

1996 - 2000 December 7, 2010 August 31, 2011

2001 - 2005 December 7, 2010 September 30, 2011

2006 - 2008 (Sept) December 7, 2010 March 31, 2012

What would you do?

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Robert Rauf

CMG Home Loans - Toms River, NJ

I just posted the updated expiration dates for my area!

I have been suggesting that agents that do business in the areas/projects approach the associations and suggest that they get the approvals done. The cost is about $2,000, spread out over 300 units it is pennies, but WAY too much for an agent or a lender to absorb on one deal, and the approval would be good for 2 years!

Jan 13, 2011 09:31 AM

Karen Deis

ApartmentToolKit.com - Minneapolis, MN

When In-house training is not enough!

Robert, Yes, too much money for lenders to absorb and it's best to get the homeowners assocation of the projects involved so they have some skin in the game. It's in their best interest!

Jan 13, 2011 01:35 PM

Corrine, hate to break the news, but we're going to have the same problems with Fannie/Freddie!

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Karen - Just today, I was speaking with the HOA management for a popular complex in my area. They're going to propose it at the next meeting this month. And you're right too, Fannie/Freddie have their own requirements too so it's not just FHA either folks.

Jan 13, 2011 03:19 PM

Corrine: DONT shy away from FHA... it often is a MUCH better way for your clients to buy a home!

Donne: If you do the math for the bigger projects the cost is down to just a couple of bucks/unit... to make your home more valuable and easier to sell, it should be a no-brainer, hopefully the association feels the same way!!!

Karen, Sorry for hijacking, Just hate when I see people shy away from FHA... and Donne and I always seem to think alike!

Jan 14, 2011 04:11 AM

Robert & Donne - Totally agree and the word needs to get out especially to agents who specialize in the condo market--they need to be pro-active or they'll be out of business--at least in that niche. It's so sad that the government is making it HARDER to sell homes when they preach they want to HELP people!

Jan 14, 2011 04:47 AM

Ethical Dilemma for FHA Condo Buyers? What would you do?

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