FHA HAS RECENTLY ISSUED NEW GUIDELINES REGARDING CONDOS. UP UNTIL NOW, A CONDO FOR WHICH THE BUILDER HAD PROCURED FHA APPROVAL WAS AUTOMATICALLY ELIGIBLE FOR FHA FINANCING. NOW, EVEN 'FHA APPROVED' CONDOMINIUMS WILL UNDERGO SCRUTINY.
HERE ARE SOME OF THE GUIDELINES:
1) PROJECT MUST BE 100% COMPLETE AND CONSTRUCTION MUST BE COMPLETE FOR 1 YEAR, AS EVIDENCED BY ISSUANCE OF THE C.O. FOR THE LAST UNIT CONVEYED;
2) NO SINGLE ENTITY MAY OWN MORE THAN 10% OF THE UNITS IN THE PROJECT;
3) PROJECT'S BUDGET PROVIDES FOR THE FUNDING OF REPLACEMENT RESERVES FOR CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE IN AN ACCOUNT REPRESENTING AT LEAST 10% OF THE BUDGET;
4) CONTROL OF THE H.O. ASSOC HAS TRANSFERRED TO THE OWNERS;
5) OWNER OCCUPANCY RATIO MUST BE AT LEAST 50%.
FAILURE TO MEET ANY OF THESE STIPS MEANS THAT THE ALLOWABLE FHA CONCENTRATION HAS TO BE LESS THAN 30%.
HERE ARE REQUIRED DOCS:
1) FIDELITY BOND/INSURANCE REQUIRED FOR NEW AND ESTABLISHED PROJECTS WITH 20 OR MORE UNITS
2) NO MORE THAN 15% OF THE TOTAL UNITS MAY BE IN ARREARS (OVER 30 DAYS PAST DUE) OF THEIR ASSOC DUES;
3) REVIEW OF CURRENT BUDGET INCLUDING P&L AND BALANCE SHEET, TO VERIFY ANY ASSESMENTS THAT MAY NEGATIVELY AFFECT THE VIABILITY OF THE ASSOCIATION;
4) HO6 POLICY REQUIRED WALLS IN (THIS WAS ALREADY IN EFFECT)
ALSO, IF FLOOD INSURANCE IS NEEDED, THERE MUST BE A MASTER POLICY FOR ALL UNITS AND COMMON AREAS IF ANY PORTION OF THE PROJECT LIES IN A FLOOD ZONE.
THERE ARE SOME THINGS IN THIS THAT REALLY JUMP OUT AT ME, AND I'M SURE I'M NOT ALONE.
FIRST, IS THE DUES ARREARAGE MAX OF 15%. I'VE SEEN A LOT OF CONDO QUESTIONNAIRES IN MY DAY, AND AN AWFUL LOT OF THEM WOULD EXCEED THAT MAXIMUM.
SECOND, THE PROJECT MANAGEMENT COMPANIES WILL CHARGE FEES TO DISCLOSE THIS INFO. MANY ARE CHARGING A MINIMAL FEE ALREADY TO FILL OUT A BASIC QUESTIONNAIRE. YOU CAN BET $$$$ TO DONUTS THAT THESE FEES WILL INCREASE. SO NOW SOMEONE ( THE BUYER?) IS GOING TO HAVE TO PAY A FEE JUST TO FIND OUT IF THE CONDO IS ELIGIBLE FOR FHA FINANCING.
THE WAY LINCOLN IS APPROACHING THIS IS TO HAVE THE LO TAKE A LOAN APPLICATION, AND FORWARD IT TO PROCESSING. IF PROCESSING IS UNABLE TO GET A CASE #, WE KNOW WE HAVE AN ISSUE.
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