Ok, so I show my first time home buyers a Homepath condo because I’m familiar with the many incentives Homepath offers, including no requirement for an appraisal or HUD approval. Well, even though my client has stellar credit, the Homepath automated underwriting denies my client, although they are over qualified to buy the home under FHA guidelines. So after almost two months, we are still waiting for FHA approval from HUD on the condo, and fighting to keep the transaction alive for my buyer client.
Why is this important to you, because this could have been avoided. In May, HUD ‘de-certified’ every condo and townhome and required each to re-apply for certification, giving notice about what was going to happen. The reason is the crash of the housing market. FHA realized that a lot of delinquent and foreclosed properties were condos, so it tightened its rules to help limit liability.
So if you are considering purchasing in condo or townhouse communities, please realize that if the management hasn’t reapplied, units can’t be purchased with an FHA loan. This my friend hurts everyone, the owners trying to sell by limiting their buyer base and the buyers who can buy if the management didn’t apply for FHA approval.
Some condo associations immediately applied for recertification, but many did not. Some may have not realized they had to get recertified. The result is buyers are ineligible for FHA financing to buy these units and many sellers don’t understand how this limits their buyer profile.
We need to get the word out to condo owners, condo associations, property managers, and anyone who is involved in buying or selling a condos or townhomes. Is your condo community FHA approved? Go to HUD.GOV Enter a ZIP Code or just the city and state and a listing of every condo association pops up. If in the right column it says “expired,” it’s not FHA certified. Then it’s time to get in touch with your condo board or association. There’s a good chance they’re not even aware of the issue.
Click link for details on Condominium Approval Process for Single Family Housing.