We Don’t Want “Those” Kinds of Buyers Here

Reblogger Carla Muss-Jacobs, RETIRED
Industry Observer with RETIRED / State License is Inactive Inactive License Oregon


GREAT post about the stubborn people running some HOA's.

This post by a loan officer is a good example of the "Surly Dog in the Manger" tale my Mother told me about when I was young.

Seems as though a surly, old dog went into a barn during the heat of the day.  He found a nice, cool manger filled with hay to lay in.  At nightfall, the cow came back into the barn, was hungry and wanted to eat the hay in the manger. The old, surly dog wouldn't budge.  He was afraid that the cow would eat the nice hay in the manger, and then he'd have no place comfortable to sleep.  He refused to get up and allow the cow to eat.  Do you know what happened . . . they both starved.

When an HOA refuses to allow the development to get the FHA approval . . . they are REDUCING the buyer pool for the current OWNERS!  When going to sell a unit, if the development is not FHA approved, it does cut the buying pool considerably. 

When selling property you WANT to have the buying pool expanded . . . not elminated or reduced.  This practice elminates the FHA buyers.


Original content by ReadySetLoan Condo Approval Team


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 confusedimportant 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

The FHA Condominium Project Approval Team at ReadySetLoan.com is dedicated to helping condominium projects across the nation to obtain their FHA approvals or become recertified with FHA.  We can help your project.

Please contact us with any questions regarding FHA condominium project approvals.  You can email me at askeric@readysetloan.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





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Adrian Willanger
206 909-7536 AdrianWillanger-broker.com - Seattle, WA
Profit from my two decades of experience


I've seen this many times where builders or HOA don't want to jump through the hoops to get thier building and projects approved. This practice can come back and bite them. 

Oct 19, 2013 09:44 AM #1
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

Wow....great story to prove your point. Silly HOAs don't realize the kind of scrutiny a FHA buyer has to go through. 

Oct 19, 2013 10:06 AM #2
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Great reblog. I've seen so much of this over the last few years it's ridiculous. One of these days, someone is going to sue a management co. when they suggest or downplay FHA approval. It does hurt the homeowners who unfortunately don't understand it fully.

Oct 19, 2013 10:50 PM #3
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I saw this as originally posted.  Always expand the pool of buyers to get better prices and values.

Oct 21, 2013 04:29 AM #4
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Carla Muss-Jacobs, RETIRED

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