How Do Delinquent Homeowners Association (HOA) Dues Affect FHA Mortgages?

By
Mortgage and Lending with Prospect Mortgage NMLS #151088
http://actvra.in/49Lh

How Do Delinquent Homeowners Association (HOA) Dues Affect FHA Mortgages?

As part of the FHA condo project approval process, various aspect of the Home Owner's Association must be evaluated.  One such aspect is the delinquency rate of the current owners.  FHA guidelines require that no more than 15% of the total units can be in arrears on their condominium association fee payments.  Arrears is defined as more than 30 days past due.  This does not include late fees or other administrative expenses. The 15% includes all units (occupied, investor, bank-owned, vacant).

Should the delinquency percentage exceed 15%, exception requests may only be considered on a case-by-case basis.  The mortgage lender can submit a request to the jurisdictional HOC for the property.  No exception requests can be processed by the mortgage lender under the DELRAP option. Of course, FHA does reserve the right to reject any exception request received.

In order to be considered for an exception request, the following requirements must be met:

  • No more than 20% of the total units can be in arrears (more than 30 days past due).
  • The HOA provides a report for the past six months that reflects the history of unpaid assessments.
  • The HOA current reserve fund balance and current operating results (documented HOA Balance Sheet and Income/Expense financial statements dated less than 90 days at the time of submission) evidences excess available funds in the amount of the outstanding arrearage.
  • A review of the HOA financial statements and verification of the reserve account balance reveals that the HOA has sufficiently accounted for bad debt and arrearages.
  • A current reserve study that is no greater than 24 months old supports the sufficiency of the current HOA assessments to meet the project component replacement needs.
  • The HOA provides evidence of actions to collect the unpaid arrearages, including legal action, execution of payment plans, or other similar efforts.
  • The exception terminates with the expiration of the current condominium project approval.

HOA Dues delinquencies is just one of the many aspects of the FHA condo project approval process.

 

 

Posted by

 

It is always advisable to consult with a knowledgeable lending professional when navigating today's turbulent mortgage and real estate marketplace.  I am committed, qualified and equipped to help you evaluate your options!

 

 

 

Also check out:

 

Conventional Financing Mortgage Program Overview/Updates

 

FHA Financing Mortgage Program Overview/Updates

 

Georgia Dream Down Payment Assistance Program Overview/Updates

 

USDA Financing Mortgage Program Updates  

 

Programs Include:

 

  • Conventional (Fannie Mae & Freddie Mac)

  • HomePath - #1 Volume Retail Lender

  • HomePath Renovation

  • FHA

  • FHA 203K Renovation Loans (Streamline or Consultant)

  • Georgia Dream Down Payment Assistance

  • Jumbo

  • USDA

  • VA

  • Conventional Condo Project Approvals

  • FHA DELRAP / HRAP Condo Project Approvals

    *************************************************************************************

    Rodney Mason is a Sr Loan Officer located in Atlanta, GA.  He is also 203K Renovation Loan and HomePath REO Property Specialist.  He can be reached at (404) 591-2453.

    Providing financing for all cities across Georgia including: Acworth, Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Avondale Estates, Blairsville, Bloomingdale, Blue Ridge, Bogart, Brunswick, Buckhead, Buford, Canton, Carrollton, Cartersville, Chatsworth, Clayton, College Park, Columbus, Commerce, Conyers, Covington, Cumming, Dahlonega,  Dacula, Dalton, Dawsonville, Decatur, Doraville, Douglasville, Duluth, Dunwoody, East Point, Fayetteville, Flowery Branch, Gainesville, Greensboro, Hampton,  Hapeville, Hinesville, Hiram, Jackson, Jefferson, Jonesboro, Kennesaw, Lagrange, Lawrenceville, Lilburn, Lithia Springs, Macon, Madison, Metter, Morganton, Morrow, Newnan, Norcross, Oakwood, Peachtree City, Pooler, Richmond Hill, Riverdale, Rome, Roswell, Sandy Springs, Savannah, Scottdale, Statesboro, Stockbridge, Stone Mountain, St Marys, Sugar Hill, Suwanee, Thomasville, Thunderbolt, Tucker, Tybee Island, Valdosta, Waleska, Warner Robins, Waycross, Wilmington Island, Winder, Woodstock, and many more.

    Providing financing for all cities across Alabama including: Alabama Port, Anniston, Athens, Auburn, Bessemer, Birmingham, Boaz, Bridgeport, Cedar Bluff, Chickasaw, Clayton, Coden, Dauphin Island, Decatur, Dothan, Eufaula, Fairfield, Fairhope, Florence, Foley, Forestdale, Fort Morgan, Fort Payne,Gasden, Grand Bay, Gulf Shores, Heron Bay, Homewood, Hoover, Jasper, Josephine, Madison, Meadowbrook, Midfield, Mobile, Mon Louis, New Hope, Orange Beach, Oxford, Oyster Bay, Phenix City, Prichard, Rainbow City, Saraland, Satsuma,
    Scottsboro, Selma, Troy, Theodore, Tillmans Corner, Trussville, Tuscaloosa, Vestavia Hills, Warrior and many more.

  •   

    Providing financing for all cities across Tennessee including: Athens, Brentwood, Bristol, Chattanooga, Clarksville, Cleveland, Cookeville, Dyersburg, Franklin, Gatlinburg, Greeneville, Johnson City, Kingsport, Knoxville, Maryville, Memphis, Morristown, Murfreesboro, Nashville, Newport, Oak Ridge, Pigeon Forge, Sevierville, and many more

 

               

 

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Gina Chirico 07/10/2011 01:01 PM
Topic:
Lending / Financial
Location:
Georgia
Groups:
Georgia Association of REALTORS®
REO ALABAMA
Coastal Georgia Real Estate, Events and Living
MetroAtlantaRealEstateProfessionals
Atlanta Real Estate Q&A
Tags:
condo
fha
birmingham
smyrna
midtown
mobile
savannah
roswell
al
decatur
ga
marietta
hud
rome
hoc
hrap
delrap
atlantaaugusta
dunwoodykennesaw

Spam prevention
Show All Comments
Rainmaker
181,938
Dan Rosenberger
Harvest Realty - Westfield, IN

Rodney, once again you have been a source of solid information in the often misunderstood world of condos.  There are definitely some differences between condos and single family homes.  The FHA approval process is definitely one of those unique features.  With the economy having left so many condo projects in limbo, it is more important than ever to understand this process.

Jul 03, 2011 04:53 PM #1
Rainer
51,382
Richard Riley
RE/MAX Properties SW - Orlando, FL
CDPE, I.R.E.S.

Good review.  Thank you.

Jul 03, 2011 06:17 PM #2
Rainmaker
136,720
Steve Stenros
Poway,La Jolla,Del Mar,Mira Mesa,Carlsbad,Escondido,Temecula - San Diego, CA
CREIA MCI, ICC, ACI Home Inspector,San Diego

Rodney: Anyone doing a condo project would be wise to seek out a knowledgable mortgage/finance person like yourself! I'm sure you save them a lot of headaches!

Jul 04, 2011 01:19 AM #3
Rainer
478,183
Not a real person
San Diego, CA

Just stopped by to say that I

Happy Fourth of July!

Jul 04, 2011 12:48 PM #4
Rainmaker
354,735
Rodney Mason
Prospect Mortgage - Atlanta, GA
FHA 203K & HomeStyle Renovation-AL,GA,TN

Thanks for all of the comments.  Happy Fourth of July.

Jul 04, 2011 10:40 PM #5
Ambassador
2,663,840
Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Rodney, this is an important read for anyone involved in a sale or purchase of an HOA governed property.  Great explanation.

Jul 09, 2011 10:38 AM #6
Ambassador
2,663,840
Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Hey, Rodney!  I included this post in Last Week's Favorites.

Jul 10, 2011 10:31 AM #7
Rainmaker
354,735
Rodney Mason
Prospect Mortgage - Atlanta, GA
FHA 203K & HomeStyle Renovation-AL,GA,TN

Patricia...thanks for the inclusion on your great list.

Jul 10, 2011 12:16 PM #8
Rainmaker
356,306
Gina Chirico
Lattimer Realty - Fairfield, NJ
Real Estate Agent - Essex County, New Jersey

Rodney, great info!  I re-blogged your post.  Its a good source for consumers and agents! 

Jul 10, 2011 01:05 PM #9
Rainmaker
704,960
Evelyn Kennedy
Gallagher & Lindsey, Alameda, California - Alameda, CA
Alameda, Real Estate, Alameda, CA

Rodney:

Thank you for your valuable information.  I am bookmarking your post, because I know I will the need the information at some point.

Jul 10, 2011 01:18 PM #10
Ambassador
1,855,890
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Rodney - I'm grateful that Pat included you in here weekly post.  This is good information that I'm bookmarking for later.

Jul 10, 2011 01:39 PM #11
Rainmaker
354,735
Rodney Mason
Prospect Mortgage - Atlanta, GA
FHA 203K & HomeStyle Renovation-AL,GA,TN

Gina....Thanks for the re-blog.

Evelyn.....I'm glad its been useful. 

Christine.....It was great of her to include it.

Jul 10, 2011 01:55 PM #12
Rainmaker
2,581,014
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Good post.  I will post it on my Facebook page.

 Blooming for you!

Jul 14, 2011 08:05 AM #13
Rainmaker
748,057
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Capital Properties-Buy a home in Washington DC. Sell a home in Washington DC - Washington, DC
How much is my Washington DC House Worth?

Rodney I was trying to get a hold of a listing agent yesterday. I wanted to ask him about an offer that I wanted to submit to him on his condo listing. He tells me that the Delinquency rate is 22% so a FHA will not work. But I read your comment in your blog where you said

Should the delinquency percentage exceed 15%, exception requests may only be considered on a case-by-case basis.  The mortgage lender can submit a request to the jurisdictional HOC for the property.  No exception requests can be processed by the mortgage lender under the DELRAP option.

I sent the e-mail to my lender. So hopefully we can work something out. Suggesting this one for a feature. Great post.

Jul 14, 2011 11:29 AM #14
Rainmaker
354,735
Rodney Mason
Prospect Mortgage - Atlanta, GA
FHA 203K & HomeStyle Renovation-AL,GA,TN

Roy...Thanks for the Facebook post.

Lanre....According to the HUD announcement, they wont allow more than 20% though. 

  • No more than 20% of the total units can be in arrears (more than 30 days past due).
  • Jul 16, 2011 09:08 AM #15
    Rainer
    104,512
    Wayne Thompson
    Walden Mortgage Group - Lexington, KY
    CMB

    Rodney...Solid information on an issue most people are unaware of. I have run into this lately and it is getting more and more common. I now get the HOA letter before we start the loan process.

    Wayne

     

    Aug 15, 2011 12:15 PM #16
    Rainmaker
    354,735
    Rodney Mason
    Prospect Mortgage - Atlanta, GA
    FHA 203K & HomeStyle Renovation-AL,GA,TN

    Wayne.....Doing as much upfront as you can is the best.

    Aug 15, 2011 07:47 PM #17
    Rainmaker
    582,540
    Inna Ivchenko
    Mannis Real Estate Group - Calabasas, CA
    Los Angeles / Valley Homes

    I have a condo with very solid HOA and Management company, but the ratio of tenant/owner occupied is not good....I have a great offer on this condo, but this one is FHA....Crossing my fingers...

    May 26, 2014 12:31 AM #18
    Show All Comments
    Rainmaker
    354,735

    Rodney Mason

    FHA 203K & HomeStyle Renovation-AL,GA,TN
    Ask me a question
    *
    *
    *
    *
    Spam prevention

    Additional Information