FHA Guidelines requiring 10% reserve vs conventional loan requirements...

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AnnW (Ohio)
Posts: 29

Posted:

Need answers as we are preparing to present budget. Ohio law states 10% contingency reserve unless majority votes less or -0-. My reading of new FHA regs state it MUST be 10 % regardless of Ohio law. We have always been on the approved list for FHA & conventional until these recent changes. Our complex of 52 units built in 1973 has $22,000 set aside for a capital reserve...these are funds we received this year from settlement with past management co. We have a very intelligent owner who has put together a capital reserve report that as yet has not been shared with the community. Our price range before the downturn in the market was $90 to 110,000. Last 4 sales have been: sheriff sale $40,000 and 3 cash sales of $60,000!

The board wished to request a 5% reserve this year by asking for a majority vote. THEN I read the regs for the new FHA requirements and believe it is in our best interest to establish a 10% reserve...but the board does not all agree. Since we have had several foreclosures because of -0- or low down payments they are of the opinion that maybe we do not want FHA loans. I am a Realtor as well as the wife of the President and have told them they will lose a large number of buyers in the future..believe I saw 40% quoted somewhere. And we would be doing a disservice to the owners. But not certain that will persuade anyone.

I have several questions: 1..Am I correct that conventional condo loans will require a 20% down payment? 2..Do conventional loans have requirements re budget allocation of 10% for contingency reserve? 3. Do conventional loans consider reserves at all? 4. Do you all agree it would be foolish to disregard FHA new regs? 5. Has anyone gone through the process of FHA certification & can it be done without an expert and how long does it take? 5. What constitutes a fully funded reserve and how do FHA and conventional lenders look at capital reserve to consider if complex is OK to approve? 6. When you have a budgeted contingency reserve of say 5 or 10%...what happens to reserve monies at the end of the year if you did not need to use the money? 7. Can you carry over to next year as cash carryover? 8. If you wanted to fund your capital reserve with all or part of that money would that require a vote and a presentation of the capital plan? 9. I think the plan is quite thorough...is it ok to save the cost of a professional plan if community agrees? 10. If all goes well, we will have approximately $6000 cash carryover this year. Can we carry over in order to help with 10& cont reserve should they decide to do that?

We were coming through a terrible situation when this board took over 2 years ago. Fired the new management company.. too big and did not work with the mess we were in from previous board. We were in a law suit with the prior Management company and settled out of court. Due to our difficulties (also a road collapsing which had to be repaired costing $25000)) we had no contingency reserve in 2009 or 2010...and without a vote I might add! Now the settlement money will go into a capital reserve..$22-25000. The plan just YESTERDAY was to ask for a majority vote while recommending a 5% cont reserve...also to tell owners that money from settlement will go to capital reserve...(without getting into the capital plan & funding until early next year. Too much with deciding on reserve and elections) I have thrown a monkey wrench into their plans with this FHA requirement...and everyone is up in arms...meaning the board!

I would appreciate any answers you can give me. Especially concerning any new conventional requirements concerning the contingency and capital reserve... in case they use that as an excuse not to request FHA certification.

Ann W.

ChrisP5 (Missouri)
Posts: 165

Posted:

I am sure others will jump in with some answers to the questions you posed but I am curious as to what you will use your reserves for? Your condo is going on 40 years old so if you haven't already started having large capital expenses it is likely you will in the not so distant future.

We are a larger association with just over 200 units but our reserve study shows us spending something in the neighborhood of 4,500,000 on capital items in the next 30 years. For us hiring a professional to do our reserve study was very eye opening we had put some rough guesses together but when they came in and started listing everything that would need to be replaced in the future there was a lot of things not on our list.

Our community isn't FHA eligible under their guidelines, we have heard stories that it has impacted some peoples ability to get loans.

AnnW (Ohio)
Posts: 29

Posted:

Thank You for response Chris. I don't have a copy of our owner generated capital plan so can't say what exactly it includes. I do know that an expensive roof replacement will be coming up in approximately 5-8 years requiring the removal of two layers of roofing! And we have a well cared for but very dated clubhouse with an apartment above for guests which will require two new kitchens and three baths etc,etc. We are situated on two original fishing lakes with a separate gravel road that brings owners and guests to the clubhouse.
During the summer of 08 approximately 100 feet of that road collapsed from a lake leak under the road... a creek on the other side of this road. A scary unexpected situation...and the bids brought to us by the management company were 60% higher than what we eventually spent to have it repaired. At that time, we were a new board... and came to the final conclusion that we could take care of our complex better than a management company because we cared more about how our monies were spent. Sometimes if you work hard enough checking out every avenue,issues can be resolved successfully with fewer precious dollars! We were fortunate to find just the right contractor! The entire situation caused further disharmony as we were in the midst of a law suit brought about by the previous board closing their eyes to the fraudulent record keeping of a prior mangmt co. We survived and have our ducks in a row for more success... hopefully. A lot of work by our present board who have the time as most are in the retirement stage of life...with a great deal of wisdom. Three are up for re-election so we'll see how that goes. Even though we have done a superior job...most would like to hire a management company...again! And to finally answer your question...due to previous boards we are woefully under-funded!

Ann W.

GlenL (Ohio)
Posts: 5,491

Posted:

Ann, I believe that conventional lenders are also starting to follow the FHA guidelines, a check with local banks should confirm this. Not to mention buyer's agents who will steer potential buyers away.

What you need to stress to the membership is that if they vote yes for this scheme then they are opening themselves up to the potential of massive SPECIAL ASSESSMENTS which they could possibly have to pony up within a month or two. That or make the Board fund the reserves which while it will raise assessments at least insures that the people who are benefiting today haven't moved on leaving everyone else to pay the piper.

Studies show that 5 out of 4 people have problems with fractions

DonnaS (Tennessee)
Posts: 5,671

Posted:

Ann,

I found this under new FHA rules. You will notice that the 10% Reserves says "may not be less than 10% of the OPERATING BUDGET

"New Project Eligibility Guidelines

Under the new project eligibility requirements, all condominiums (consisting of 2 or more units) must meet the following requirements:

At least 50% of the units of a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 % of the number of presold units (the minimum pre-sale requirement of 50 percent still applies).

Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
At least 50% of the total units must be sold prior to endorsement of any mortgage on a unit. Valid pre-sales include an executed sales agreement and evidence that a lender is willing to make the loan.
No more than 15% of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.

No more than 25% of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogeneous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.

Reserve Study – a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed. The regulations fail to define what is “adequate,” however, guidance may be found in the new Fannie Mae/Freddie Mac condominium guidelines which mandate at least 10% of annual operating budget in reserves.

No more than 10% of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100% complete; and only one unit can be conveyed to non-owner occupants.
Rights of first refusal are permitted unless they violate discriminatory conduct under the Fair Housing Act.

AnnW (Ohio)
Posts: 29

Posted:

Donna...Thank You. the "may not be less than" tells the tale but some did not seem to understand that FHA is not concerned with our Ohio state law. Unfortunately, the Ohio law is written to allow for less and some over the past years have used that unwisely to keep ass. fees down with little regard to the future.
Glen...Thank You. Not certain what the board will do but think they are leaning the 10% route...a meeting today will resolve the matter.

I wonder if someone could please explain exactly how this reserve works. If a 10% reserve is included in the budget, is that a contingency reserve for unexpected expenses not considered capital expenditures? If so, what then happens to that money if is is not necessary to tap that reserve during the course of the year? And then what about continuing to fund our $22-25,000 whi9ch will be placed in the capital reserve. Must we then have a line item in our budget with an amount going to the capital reserve until it is fully funded? That would then require two reserve funds in the budget. Als,o is the reserve money removed each month into a savings account or carried in the check balance..very important because there is disagreement.

Our by laws are the original from 1973 and state that "the association shall build up and maintain a reasonable reserve for contingencies and replacement. Extraordinary expenditures not originally included in the annual estimate which may be necessary for the year, shall be charged first against such reserve." That falls under the title RESERVE for Contingencies and Replacement. Another section called Capital Additions and Improvements states "nor shall the Ass. authorize any structural alterations, capital additions to, or capital improvements of the common Area and facilities requiring in excess of Five Hundred Dollars without in each case the prior approval of the members of the association entitled to exercise a majority of the voting power of the Ass.

it seems contingency and capital reserve are one and the same? This board wanted to protect the funds of $22-25,000 so that a future board could not tap them "willy-nilly" for whatever they wished. The previous board president spent %6000 in Deccember of '08 replacing shrubs around her building...actually talked her board into that...when our road had collapsed and we had no idea how we would pay to repair! This board hopes to prevent that sort of thing in the future.

An explanation of these reserves would really be helpful. Even the FHA regs do not make it clear if each year the reserve is added to the capital reserve until it is funded...or what? HELP!

Ann W.

MaryA1 (Arizona)
Posts: 388

Posted:

Ann,

A reserve study will pinpoint all the items that funds should be set aside for to pay for future repairs (major repair) and replacement of each item. The reserve study should also state how much money should be put into the reserve fund each year. This money is put into a separate account,usually an interest bearing savings account or a money market account. When an item that is listed in the reserve study needs a major repair or needs to be replaced the money is taken from the reserve account and deposited into the operating account to pay the expense.

A contingency fund is different than a reserve fund. Some assn's will maintain a contingency fund for insurance deductibles and other unforeseen expenses that might arise. The contingency fund should also be a separate bank account.

Your bylaws lump the two into one "reserve" account but they really should be separated so the money can more easily be tracked.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Ann,

I believe that the Federal law will trump the Ohio State Law on this one.

AnnW (Ohio)
Posts: 29

Posted:

Thank you Mary.
Each post sheds a little light! I'm thinking that because we have not shared our capital plan...we have not decided on how to fund it further. When we do that, it will take a majority vote for determining how much should be included in our annual budget toward the capital reserve. Correct? But then how does that interact with required FHA 10% reserve? If that is a CAPITAL Reserve then a vote isn't necessary. Read on...very confusing.

What do you call the 10% reserve mandated by Ohio law ( which OH states it can be changed to less by a majority vote...but now is super ceded) by FHA requirements of 10% reserve? WHAT ARE THESE RESERVE FUNDS...CAPITAL reserve funds or CONTINGENCY reserve funds? IF they are capital reserve funds then they would be added to capital reserve either each month or at the end of the year. But then they could only be used for capital items, so how would we cover ourselves for any unexpected, un-budgeted happenings?

IF they are contingency reserve funds, then they could be placed in a savings account each month and used for unexpected minor un-budgeted items that might present throughout the year. Then what do you do with the money at the end of the year if we did not use OR if maybe half had to be used? Cash carry over for next year? Vote to place a percentage in the capital reserve? Are those possibilities?

Can anyone explain this? WHICH ARE THEY? Am I making this too complicated...can't see the forest for the trees!! It seems to me as I have traversed the net these past days, that I came upon others being confused as to what these mandated FHA reserves are and how to treat them at year end.

And if others could chime in as to whether you leave the 10% in the check book or place in savings each month? Our money/budget geru, an owner, who advises the board believes (whatever they are) they should be left in the operating fund. Your thoughts?

Ann W.

ChrisP5 (Missouri)
Posts: 165

Posted:

As for it requiring a majority vote of the association as to what your budget would have for reserves you would need to read your bylaws carefully. Some associations (ours included) require a large percentage of the association to vote against the budget otherwise it automatically passes.

We keep a contingency fund of approximately 1 months worth of expenses and the rest is in our capital reserve account. Our contingency fund is designed to help with minor dips in cash flow but not for unbudgeted expenses except for if they were an emergency perhaps but then there should be a plan for repaying that money. The reserve accounts are kept apart from the operating account. We deposit money into the reserve fund on a monthly basis (1/12th of the years contribution). When people don't see the funds in the operating account they are less likely to spend them on other items.

I think it is also important to keep in mind that Ohio condo law is actual law while the FHA guidelines are guidelines for financing eligibility from a federal agency but not actually law as to how you have to fund your reserves. That being said if you can maintain FHA eligibility for your property by following their guidelines that is probably in your associations best interest.

EllieD (Vermont)
Posts: 446

Posted:

Here is the link to the HUD/FHA approval process letter “Mortgagee Letter 1009-46 B” which is “THE document” that specifies what is required in the way of reserves, and which also contains all the other requirements that now must be complied with for FHA approval.

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46bml.pdf

I also just happened to find an opinion piece that discusses the interpretation of the “at least 10% of the budget for reserves” while I was searching for information. I know nothing about the “company” that wrote this, but I found it to be well written, so here is the link:

http://www.fha-reserve-study.com/index.php?option=com_content&view=article&id=3&Itemid=3

I also noticed on that company’s web site, that they have a “sample” reserve fund study that can be downloaded.

Hope these links helps. I always like to read documents exactly as written.

AnnW (Ohio)
Posts: 29

Posted:

Thank you Chris. To clarify! In your budget you reflect a line for the required 10% reserve which is added monthly to your capital reserve bank account. You also reflect in your budget a contingency fund of approx. 1 months expenses for minor dips in cash flow. Therefore you have two reserves...a capital and a contingency! If you had to use the funds for an emergency you would have a plan for repayment. ( How would that be handled? ) Our association dues are figured on the Total Disbursements + reserve of 10%. If we then add 1/12 of expenses for contingency reserve...our dues will rise even more... Is that a correct assumption?

I personally think this is the correct way to handle.... but the board is something else. As I read the actual words of the FHA 20+ page document under BUDGET REVIEW one line said: Provides for the FUNDING of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget. Since we only have an unofficial Capital plan that has not been presented to the community as yet...the decision as to how to fund has not been determined. Now it appears it will be determined for them with this wording. Our owner geru that advises the board is under the delusion that the !0% fund required by OHIO and now FHA is a contingency reserve. When I pass this info on they will be in cardiac arrest! If you read this and can respond a line or two as to how you handle a pay back i would appreciate knowing. As to the number of votes needed...our original bylaws say only a majority and nothing in Ohio law that I can see changes that.

Ellie...thank you! The actual words from FHA have been enlightening. Our board is in total disarray to the point of some not even wanting to deal with FHA certification. When I tell them that this 10% reserve is only for capital reserve and not for contingency reserve...and that they will have to add to the budget if they want a contingency reserve, there will be chaos!
I think we are fine on all issues except the financial. Problems in the past with previous boards leave us totally underfunded. Our owner originated capital plan suggests $300,000 needed. We had -0- until our legal settlement this year. And the board wants to keep ass. dues low!!

I will be checking with local banks on Monday AM. It seems that some on the board wish to fall back on conventional financing and disregard FHA. The info I have gathered on the web is not always the same. Some suggest that 20% down loans will not be required to have these reserves. I'm inclined to believe they will follow suit in order to protect their loans but there is nothing I have found to present to the board in black and white. Some say condo conventional loans will have to be 20% downpayment now...there will be no lower downpayments. In the past those lower down payments were backed by Fannie and Freddie. Any info anyone has on this will be helpful.

My thanks to everyone!

Ann W.

ChrisP5 (Missouri)
Posts: 165

Posted:

We do have a line in our budget for reserve contributions although we fund at a higher level than 10%, 10% is the minimum that the FHA wants to see put into reserves but as I have peeked around the web at associations who publish their budgets on their websites many have reserve expenses higher than the minimum. This will be particularly true for the more items you have to maintain and as the association ages.

we don't put away and extra 1/12th of our budget annually into contingency reserve, we have just set that money aside over time, kind of like your own personal emergency savings account. If you take money out of your account for unplanned expenses in theory you should have a plan to pay it back otherwise at some point the account will be empty, of course this is easier said than done.

I would check out the Community Associations Network that shows up in the yellow box on the left side of this screen. They have some pretty good resources for learning more reserves and board operations in general.

MaryA1 (Arizona)
Posts: 388

Posted:

FYI:

Copied below are the current FHA condo requirements, note that there is no requirement for a 10% reserve funding!!! Also copied below is a suggested checklist for spot loan approvals. Note that #13 talks about a reserve fund and requires that the amount of the fund be shown but it does not state that 10% funding is required.

--------------------------------------------------------------------------------
HUD Section 234(c) of the National Housing Act provides authority to insure any mortgage covering a one-family unit in a project coupled with an undivided interest in the common areas and facilities which serve the project. The project may include dwelling units in detached, semidetached, row, garden-type, low- or high-rise structures. Generally these types of properties are referred to as Condominiums.

HUD will insures mortgagees against losses on mortgage loans used for buying a condo or to refinance individual units in eligible condominium projects provided that they meet certain guidelines.

A. Project Eligibility. The condominium project must be on HUD's approved condominium list.
B. Applicant Eligibility. Eighty percent of the HUD-insured mortgages in a condominium project must be the principal residence of the owners (owner-occupants).
C. Maximum Insurable Mortgage: Same as Section 203(b) (except that the mortgage amount must be in multiples of $50).
D. Minimum Investment: Same as Section 203(b).
E. Mortgage Term: Same as Section 203(b).
F. Mortgage Insurance Premium: Monthly+Upfront MI of 1.5%
G. Refinancing: Same as Section 203(b).

If the Condominium is not approved then the Lender may go through the "Spot Approval" process.

The following requirements must be satisfied before a spot loan is endorsed:

• The condominium project must be complete. There should be no ongoing or anticipated addition of any units, common elements, and/or facilities.
• Control of the common areas of the project must have been turned over to the unit owners association for at least one year.
• The owners association must provide evidence that the project has the appropriate hazard, liability and flood insurance.
• Individual units in the project must be owned in fee simple or be an eligible leasehold interest. The project's legal documents must provide for undivided ownership of common areas by unit owners. By virtue of this ownership, unit owners must have the right to use all facilities and unrestricted common elements.
• The project's documents should not place any legal restrictions on conveyance. Any provisions that seek to limit the free transferability of title is generally unacceptable. Such restrictions include rights of first refusal and restrictive covenants. Certain governmental or nonprofit programs designed to assist in the purchase or rental of low- or moderate-income housing are exempted from the restrictions on conveyance provisions.
• At least 90% of the units in the project must have been sold.
• At least 51% of the units in the project must be owner-occupied.
• No single entity may own more than 10% of the units in a project. "Entity" includes an individual partnership, corporation, limited liability company, limited liability partnership, joint venture, investor group or other natural or legal person qualified to hold an interest in real property. The 10% restriction does not apply when the ownership of less than three units would disqualify an otherwise eligible project.
• HUD recognized that the 10% cap on the number of units that may secure FHA insured mortgages in a given project can place a small regime at a disadvantage, since only a few units will invoke the limit. Accordingly, a two-tiered system was established. For condominium projects having more than 30 units, no more than 10% of the units may have FHA insured loans at any given time. Condominium projects consisting of 30 units or less, can have up to 20% of the units encumbered by FHA insured mortgages under the spot loan rule.

SUGGESTED CHECK LIST FOR SPOT LOAN APPROVALS

_______ 1. The legal documents of the homeowners association
do not contain a right of first refusal or restrictive covenant.

_______ 2. The unit is part of a condominium regime that
provides for common and undivided ownership of common areas by
unit owners.

_______ 3. The project, including the common elements, and those
of any Master Association, are complete, and the project is not
subject to additional phasing or annexation.

______ 4. (a) There are no special assessments pending.

______ (b) No legal action is pending against the
condominium association, or its officers or directors.

______ 5. The common areas have been under the control of the
homeowners association for at least one year.

______ 6. At least 90 percent of the total units in the project
have been sold. Verified by _________________________.

______ 7. At least 51 percent of the total units in the project
are owner-occupied. Verified by ______________________.

______ 8. There are no adverse environmental factors affecting
the project as a whole or individual units .

______ 9. No single entity owns more than 10 percent of the
total units in the project. Verified by ______________________.

______ 10. The units in the project are owned in fee simple or
the units are held under a leasehold acceptable to FHA.
Leasehold in file.

______ 11. The owners association has adequate common area
insurance coverage. General liability, replacement coverage,
etc. reflects the character, amenities and risks of the
particular development. Flood and other insurances carried, when
applicable.

______ 12. General maintenance level of common elements is
acceptable and there is no deferred maintenance, based on the
comments by the Appraiser and/or the pictures.

______ 13. The owners association has a reserve plan and a
reserve fund, separate from the operating account, that is
adequate to prevent deferred maintenance. The amount of the fund
is $_________ as of __________.

_______14. (a) For projects consisting of over 30 units, no
more than 10 percent of the total units are encumbered by FHA
insured mortgages.

_______ (b) For projects consisting of 30 units or less, no
more than 20 percent of the total units are encumbered by FHA insured mortgages.

EllieD (Vermont)
Posts: 446

Posted:

Mary A1, Do you have a link to HUD Section 234 (c). I did a bit of Google searching and found lots of references, but no direct link to a parent document. I wanted to check out effective and/or revision dates, etc.

The “Mortgagee Letter 1009-46 B” document that I referenced is dated November 6, 2009, and according to other info I found while searching, and that I also linked, states that Rev B supersedes Rev A issued only a month earlier, which had a 60% funded reserve requirement.

An “internet” Company that is currently writing Condominium Mortgages, just cited Letter 1009-46 B to us as the applicable document. The “at least 10% requirement” is in paragraph 11. Budget Review, in the second “bullet point”.

11. Budget Review: Mortgagees must review the homeowners’ association budget (the actual budget for established projects or the projected budget for new projects) for all projects. This review must determine that the budget is adequate and:

• Includes allocations/line items to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project;

• Provides for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget; and

• Provides adequate funding for insurance coverage and deductibles (see Section VI, Insurance Requirements).

In cases where the budget documents do not meet these standards, the mortgagee may request a reserve study to assess the financial stability of the project. The reserve study cannot be more than 12 months old. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.

In lieu of the actual budget documents, mortgagees may request and rely on Fannie Mae form 1073a, Analysis of Annual Income and Expenses – Operating Budget, executed by an authorized representative of the seller/servicer, owners association, or management agent.

And another reference I just found also discusses the 10% requirement is:
http://www.kipcon.com/pdfs/Understanding_FHA_Requirements.pdf

And I found this, which references applicable dates:
• 09-46a: Temporary Guidance for Condominium Policy. Temporary guidance for condominium project eligibility, for case numbers assigned on or after December 7, 2009 through December 31, 2010. Waives five provisions of ML 09-46b.
• 09-46b: Condominium Approval Process for Single Family Housing. Replaces ML 09-19, which implements new approval process for condominium projects. Effective for case numbers assigned on or after December 7, 2009.

I am not all that conversant with this HUD, FHA “stuff. Is your reference to HUD Section 234 (c) some sort of a parallel or superseding requirement?

MaryA1 (Arizona)
Posts: 388

Posted:

Ellie,

The info I posted is from www.fhainfo.com

I could not find the actual text for HUD section 234.

EllieD (Vermont)
Posts: 446

Posted:

Mary A1, Thank you.

I agree that FHA Section 234(c) does apply to Condominiums, but the information you found must be outdated, because the 10% reserve funding is a current requirement, although subject to interpretation as to how the requirement needs to be met.

I just did a Google search using “current FHA condo requirements” and found, among a number of other good sites:

http://www.fha.com/condominium.cfm

That site references Section 234 (c) in several places, enough to provide a general understanding of where it fits in.

KaydenH (Alaska)
Posts: 7

Posted:

I was quite surprised to learn that our older condo building recently received FHA approval. The manager stated the reserve requirement is just a "paper thing" and that FHA does not care or check that the money actually goes into reserves. Per manager also in the paperwork submission, the budget was fudged to show the required percentage of reserves being budgeted. The fudged budget was not the one approved at the last annual meeting.

Several dues increases were approved in past years specifically to fund and address the low reserves issue. However, reserves remains at less than $15,000. An owners meeting was recently held with the intent of the manager and board asking questions about when things had last been done or replaced. As a result of that meeting, a special assessment is coming up for a new roof (not yet announced to owners). The new FHA buyers had no idea this was coming up.

There is much more to this, much of it intertwined.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Sooooooo Frauding the FHA is okay? The manager stating that this is "just a paper thing" is not a manager that I would be willing to pay wages for that kind of advice.

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