FHA CONDO CERTIFICATION- EXPLAINED

Posted by Lise | Filed under: Sellers

December 7, 2010, was supposed to be the date when FHA condo project certifications were going to expire, but when that date arrived, FHA decided to extend the various recertification deadlines on a rolling basis up through 2012.  If you are looking for a condo in Bethesda like Kenwood Forest or in Washington DC or around the Ballston area on the other side of the River, this may be very important to you!

This was a welcome extension since there were 26,000 condo developments that would have had to be recertified by December 7 and would have lost their approval if they didn’t get it done.  Many of the condominiums didn’t even know that they needed to go through a recertification process! And failure to get recertified would affect future individual condo sales going through.

This recertification had become necessary because many of the project approvals dating from years ago were probably not current in regard to compliance and needed to be renewed.

What HUD effectively declared was the projects it had approved 10 or 15 years ago were no longer comliant so it was going to strip away the approvals from projects approved before 2008 and force the developments to go through a recertification process.   This was a huge change since condos were approved on a permanent basis in the past.  FHA has since said that it wants to keep a closer tab on the condo associations.  It wants to look at developments initially and again every two years through the recertifiation process.  It is an ongoing obligation that the development must be willing to commit to.

The reality however is that there are some condo developments where is costs too much money to be approved justbecause of the due diligence that would have to be performed in order to be compliant.   For example, condo developments are now required to have a reserve in the budget for maintenance and repairs equal to 10 percent of the budget.  Also, new or established projects with more than 20 units are required to carry fidelity bonds/insurance for all officers, directors and employees of the association and all other persons handling funds.

FHA insured loans were not a huge factor in the condo market until relatively recently with the downturn in the market. Now they have become a huge component of financing.  Suddenly if a condo association is not FHA certified, the condos offered for sale are less attractive than their certified competitors!  If a buyer is looking at two condo developments next door to each other and one is FHA approved and the other isn’t, the FHA certified one is at a clear advantage as far as marketing and by extension, value.  The buyer knows that it will be easier to sell at a future date because the buyer pool is infinitely larger with the FHA financing.

If you  are in the market for a condo and want a list of FHA approved developments, please give Lise Howe a call at 240-401-5577.  It is just one of the services that the Lise Howe Team provides to its buyers.

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18 Responses

  1. andre says:

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    ñïàñèáî….

  2. kenny says:

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    спасибо за инфу!…

  3. marshall says:

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    благодарствую!…

  4. Jimmie says:

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    thank you!!…

  5. Wade says:

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    ñïàñèáî çà èíôó!!…

  6. Vernon says:

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    ñýíêñ çà èíôó!…

  7. dean says:

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    good info!…

  8. Guy says:

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    thanks for information!…

  9. Jared says:

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    áëàãîäàðåí….

  10. brett says:

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    ñïñ çà èíôó!…

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