We Don’t Want “Those” Kinds of Buyers Here
Great article from Eric about why condo associations should take the steps needed to become or remain FHA approved. Sure it might cost a few dollars, but it makes units more sale-able as there is a larger pool of buyers, units hold their value better when the complex is FHA approved.
It is a sad mistake to confuse the size of a down payment with the capability of a potential buyer to be a good neighbor and good home owner.
If you are on the board of a condo complex, reach out to Eric and find out how he can help your association become or remain an FHA approved complex.
If you are looking at buying a condo and wonder if it is FHA approved? Check out this post and look to see if the complex you would like to buy in is FHA approved.
We Don’t Want “Those” Kinds of Buyers Here
One of the facets of my career is helping to educate the homeowners associations why it is so important to get their condominium project approved with HUD. At times, it is interesting to me at how difficult this undertaking can be.
I can understand some of the reasons such as logistics, finances, etc. But this one is surprising to me.
“We don’t want ‘those’ kinds of buyers here.”
“Those” means low-income borrowers. Because there are many divisions within HUD, often HOA's associate HUD with low-income and Section 8 housing. They believe that by getting HUD-approved, there will be an influx of buyers who won’t be able to afford their common charges which would pose a threat to the financial status of the project.
What they don’t understand is that getting approved with HUD has nothing to do with low-income or Section 8 housing! It merely allows certain types of government financing in the project such as FHA, USDA=RD and state-subsidized programs like CHFA in Connecticut.
“Well, these loans allow people with bad credit and less income to buy houses.”
I would have agreed with you prior to the "credit crisis" of 2008. But today’s FHA borrowers have to meet fairly strict credit criteria and income guidelines that are nearly as stringent as conventional borrowers.
“Yes, but they don’t have to come up with as much money to put down.”
True, which means they don’t have to deplete their savings accounts in order to buy. When I was a mortgage loan officer, if a borrower qualified for a great loan with a lower down payment, I would recommend it. So it doesn’t necessarily mean that the buyer doesn’t have the financial resources.
“But we just don’t want those people here.”
Are you suggesting that non-FHA buyers are more likely to pay their common charges than FHA borrowers? In this economy, seasoned professionals in their 30’s, 40’s and 50’s are being laid off with little to no opportunity of finding employment with comparable pay. Often, these positions are being filled by younger folks for less money.
Does that also mean that you don’t want young professionals, new families and seniors living here? First-time buyers use the FHA loan program roughly 40% of the time; this number has been as high as 70% for condominium purchases.
Wouldn't a recent college graduate who lands a great full-time professional job but hasn’t saved up 5%-10% for a down payment be a great unit owner?
How about seniors who could purchase with a reverse mortgage so as not to use their retirement savings? Without HUD approval, you are completely shutting these buyers out since FHA is the only reverse mortgage program.
Finally, condo units in HUD-approved projects have held their values better than in non-approved projects because they are more marketable. Without a HUD approval, you are greatly reducing the pool of buyers that are available for your units that are on the market.
Image courtesy of Stuart Miles/freedigitalphotos.net
I am dedicated to helping condominium projects across the nation to gain their HUD approvals or become recertified with HUD. I can help your project.
Please contact me with any questions regarding HUD/FHA condominium approvals. You can email me at eric@integratedpros.com or call me at 404-433-4565. I will be happy to answer any of your questions.
FHA Condo Approval Specialist
404-433-4565 Cell Phone
eric@integratedpros.com
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