Change In Fha Guidelines For Condominium Association Approval

The current FHA guidelines for condominium approval have been temporarily altered by some revisions, effective September 13, 2012 and lasting until August 31, 2014. If your association has had to obtain FHA approval in order for a new owner to qualify for an FHA loan, you know that it is a long and document-intensive process. However, the FHA has made some temporary adjustments in response to fluctuating market conditions. The following changes have been made to these requirements:

Delinquency Rates: No more than 15% of the units can be 60 days past due (formerly 30 days past due).

Employee Dishonesty Insurance: Projects with more than 20 units must have employee dishonesty insurance. (Formerly, the management company had to have separate fidelity insurance for each association, which was quite expensive).

Project Certifications: The condominium project must be certified by a person 1) acting with the best of their knowledge that the information is accurate; 2) he/she has had an attorney review the application to ensure it meets all state/local laws; and 3) that he/she has no knowledge of conditions that may adversely impact the condominium project. (Previously, filling in improper information could result in a fine and/or imprisonment).

Commercial Space Requirement: FHA will consider approval for mixed-use condominiums with commercial space of 25%-35% through the HRAP process. If the lender does the certification for DELRAP, will be considered for spaces up to 50% commercial. (Change from a maximum of 25%, no exceptions).

More on Community Associations