FHA Condo approval nightmares are haunting me from a scenario I just encountered.
Although we successfully navigated the stormy seas, Just as I did with the insurance requirements for FHA condominiums, I wanted to share this with you so that you are aware should this happen to you.
Do you know if the condo you are trying to purchase with a FHA loan is actually FHA approved?
Does your realtor know whether or not the condo you are looking at is approved?
FHA approval for Condominiums has gotten much more difficult to come by and many of the formally approved complexes have lost their approvals.
Many of these approvals were lost due to delinquent Home Owners Association dues. Before February 1st of this year you could have gotten a “spot approval” for a unit in an unapproved complex however after February 1st of 2010 the “spot approval” option was taken away making it imperative that your specific complex be approved.
There are many factors that have to be in place for that approval to be valid, things like owner occupancy ratios, concentration of FHA loans in the complex, investor ownership, delinquent HOA dues and various other factors.
As you can see there can be quite a bit that goes into the FHA approval as well as quite a bit that can cause a problem for the approval.
One thing that I have run into that can trick folks is the fact that many of the loans in the complex may be FHA loans.
This does not automatically mean that the complex is FHA approved. Those existing FHA loans may have been originated long before the complex lost their approval or they could have gotten a “spot approval” before that process went away.
As you can see it is a complex and confusing issue.
It’s not all bad news though. Staying away from a complex that is not FHA approved could save you a lot of headaches with faltering HOA’s and irresponsible owners.
There are still a ton of FHA approved complexes out there and those are definitely the ones you want to be looking at as they will likely save you from those headaches.
At this point your question is most likely how do I find out if the complex that I am interested in is FHA approved or not?
As I always seem to say (and I say it because it is so true) there is no substitute for working with a great realtor who will do their homework for you (after all that’s what they get paid for) and also a great mortgage banker who will also do their homework, in short there is no substitute for a great team working for you.