Fha Approval Process For Single Family Housing (follow-up)

Since our last newsletter article entitled “FHA Approval Process for Single Family Housing,” we received numerous additional inquiries from association boards and property managers regarding the approval process.

Once we are approved, how long does our approval stay valid?

If an Association is approved via HRAP, the approval is technically valid for two years, after which time it must be renewed by a less extensive process. However, just because your Association has HRAP approval does not necessarily mean that FHA loans will be approved. For example, HUD will re-check delinquency rates and tenant occupancy rates. If these rates do not fall into the acceptable range, the HRAP pre-approval will not help you.

How long will the process take and is it expensive?

The initial response from HUD should come within about six weeks. However, many times, HUD will request additional documentation or clarification on an issue that must be resubmitted. Accordingly, be prepared to spend several months engrossed in the process. And unfortunately, depending on your Association, the process can be quite costly. Certified copies of plats, governing documents, etc., can easily run into the hundreds of dollars. Repeated requests for information must be handled by a board member, property manager or the association’s attorney, which may require the association to be billed hourly.

Our delinquency rate is right below the 15% mark—we would like to move forward with the process. Is this a viable option?

There is definitely no reason the Board cannot move forward, however, if one or two more owners become delinquent, the effort to obtain approval is moot. It is important to be able to sell the units in your Association, however, the likelihood of keeping down the delinquency rate with today’s economy may make spending money on HRAP a risky decision if your association is on the edge of the requirement. But it is a Board decision.

More on Community Associations