FHA Certification RFP

Hi everyone,

There has been a lot of discussion regarding FHA Certification. Should a condo association get certified before it comes down to one owner attempting to sell to a buyer of a FHA Mortage?

Our property manager has posed the question to our board of directors. We are discussing the issue. We wonder if this is something we could do on our own. We might elect to fund it next year unless an owner comes to us asking for it in order to sell their owner.

It seems to me, that we need to formulate a RFP, Request For Proposal, to do a few things. It will provide the board with estimates of what certifcation will cost and help with the budget. It will also, if properly documented, show any and all owners that we are doing what we can do, as a board, to address the situation.

I'm wondering if any condo associations have put together a RFP for this....We might be able to combine great minds and arrive at a template RFP for FHA Certification!

Good question Rick. FHA Certification is evolving. Till now each Unit owner has dealt with this. I understand the following are some of the guidelines for FHA certification:

1. The association can have no more than 15% of its units in arrears with their association assessments. Arrears is considered more than 30 days past due.

2. The association’s budget must be adequate, and must include allocations/line items to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project.

3. The budget must provide for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget.

4. The association must have hazard insurance under a “master or blanket” property insurance policy in an amount equal to 100% of the current replacement costs of the condominium. If the homeowner association does not maintain 100% coverage, the unit owner may not obtain “gap” coverage to meet this FHA requirement. In cases where the master policy does not include interior unit coverage, including replacement of interior improvements and betterment coverage to insure improvements that the borrower may have made to the unit, the borrower must obtain a “walls in” coverage policy (a.k.a. HO6 policy).

5. The association must maintain liability insurance, fidelity insurance (for projects with 20 or more units) and flood insurance, if applicable.

6. At least 50% of the units must be owner occupied.