Fewer Condominium Associations FHA Eligible
contacted me regarding a listing of his that was a Condominium. He had received an offer on the listing and the offer called for FHA financing.
That's a great question. There are several reasons this occurs:
- The recent downturn in the real estate market left many homeowners (including Condo owners) "underwater" and unable to sell. That lead to Short Sales, Foreclosures, and many homeowners renting-out their Condo Units (where and when allowed). Note: Too many Rented Units may impact a project's marketability and Financing Approval Status.
- The downturn in the economy left many Condo Owners unable to pay their monthly HOA Dues in a timely and consistent fashion. Standards in the Mortgage Industry require that no more than 15% of the total number of Condo Units can be delinquent (60 days) on their payments to the Association.
- Because of the above items (1 & 2), FHA makes Condo Associations file for renewals, or updated approvals, every two years. Much can change in 2 years. It definitely has in the past 5 or 6 years.
- Those Associations that once were approved (like the Condo my referral partner was asking about above), have become ineligible for FHA financing, as their approvals have expired.
- Association Board of Officers, or its Management Company, decided NOT to re-apply, don't know of the requirement, or know they simply can no longer qualify. There are even some that just won't take the personal responsibility for the reporting of the Project Certification.
It could be that the Association's finances have turned for the worse (too many delinquent Unit Owners, too many Renters (over 50% makes it ineligible).
Or the Association simply didn't complete the renewal needed to re-certify the status of the Development.
How did the deal I spoke of above work out? Without FHA Financing remaining as an option, how was the transaction to move forward successfully?
I suggested to my referral partner that VA Financing was a viable route for financing, as the Condo Development was still VA Approved ... and the Buyer was a Veteran. Yes, FHA and VA Condo Approval processes are separate. The transaction could move forward, but not simply.
Remember, I was not the Buyer's LO, I was just acting as a "consultant" for the Listing Agent, my referral partner. This agent took my suggestion regarding VA Financing back to the original LO. He in-turn questioned where I got my info, as he didn't think the property was VA Approved.
I assured my agent that it was indeed VA approved. I then printed and sent proof of the VA approval status to my agent. He presented the proof to the Buyer's agent and his "recommended Lender". The original LO actually called and thanked me for saving the deal.
My question to you is this: Which Mortgage Lender would you want to do business with? The one that gave up on his clients ... or the one that kept digging until he found a solution that enabled a sale/purchase to close successfully?
My referral partner is of the opinion that he recommends and works with the right Mortgage Lender.
* If you're hoping to Buy, Build, or Refinance a home in the Chicagoland area, contact me today. I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
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