FHA Approval for Association -- pros and cons?

Started by BretR • 11 replies • 3686 views

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BretR (California)
Posts: 2

Posted:

Hi folks,

Our HOA in California is being asked by a homeowner to get FHA approval for our Association. This would mean it would be possible to get FHA financing for buyers wanting to purchase a unit in our HOA.

I know in the past buyers could get "spot approval" for FHA loans, but now I'm given to understand an Association itself has to be FHA approved in order for a potential buyer to get FHA financing.

It would cost the Association money to get this (one company is offering to do it for $1,000). And certification is only good for two years.

I'm relatively new to the Board of Directors world for my HOA, and this is the first time I've ever had such an issue come up.

Are there any particular pros or cons for an HOA to be certified/approved for FHA financing?

Thanks for any insights.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Bret,

For your existing homeowners it could make resales more difficult if prospective buyers cannot get loans (with a possible negative impact on home values). Also, Fannie Mae and Freddie Mac loan underwriting requirements are similar to FHA. That could make getting mortgages from several mortgage companies and banks difficult to get as well because they often sell their mortgages on the secondary market.

I ran into a problem like that when I bought my home in my current development. Lenders wouldn't provide a loan at that time because this development wasn't approved. I finally succeeded in getting a mortgage by going to the same bank that was providing construction loans to the developer.

PetunkaM (Florida)
Posts: 1,009

Posted:

Here is an article re FHA certification written by one California attorney in the event you have not read it.

http://www.hoalawblog.com/2011/05/fha_approval_and_your_associat_1.html

TimB4 (Tennessee)
Posts: 21,059

Posted:

Bret,

Are you a condominium?

BretR (California)
Posts: 2

Posted:

Hi Tim -- No, I'm not a condominium, I'm a person. (: Oh, come on, you could see that one coming. (:

But yes, our Association is condominiums -- townhomes.

TimB4 (Tennessee)
Posts: 21,059

Posted:

If I didn't see it coming I should have

TimB4 (Tennessee)
Posts: 21,059

Posted:

To explain why I had asked if your development was a condominium, it's because some people think that the FHA certification is required for non-condo developments also, which it does not. However, a PUD (planned unit development) rider is sometimes required on the mortgage paperwork.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Tim pointed out the PUD. This is where your problem truly lies. Someone in the HOA has to fill this form out. I used to as President. It asks about 25 questions such as "Fee simple?" "How many units in foreclosure"? "How many rentals"? and basic health status of the HOA. Most mortgage companies use this to gauge their loan programs.

You may want to find out who's been filling out this PUD rider for the HOA. Usually happens on some closings. The information may need updating to reflect the current conditions. This may help with qualifying for more loan programs.

Former HOA President

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JohnG35 on 03/14/2014 10:47 AM
As a realtor
You should check them out www.xxxxxxxxx.com or call (xxx-xxx-xxx).

I've reported the individual to the moderators for posting SPAM.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By TimB4 on 03/14/2014 12:08 PM

I've reported the individual to the moderators for posting SPAM.

LOL ... Now I know why all those postings were not there on other threads. Thanks Tim!!!

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