Few Condo Complexes In Connecticut Are FHA Certified Leaving Many Unable To Purchase Or Take Out Reverse Mortgages
While the Federal Housing Administration has loosened its eligibility rules, not many buyers and sellers in Connecticut will be able to benefit from them.
A check of FHA approved complexes shows that in West Hartford there is only one complex that is FHA certified and therefore eligible for low down-payment mortgages.
There are dozens of complexes in West Hartford ranging from inexpensive ones less than $20,000 to those approaching one million dollars.
But the only one that is FHA certified is the moderately priced Copper Beech complex where two bedroom condos goes for about $190,000.
(In full disclosure I own a condo at the Copper Beech).
And, according to real estate agent Mollie Abend, it has been only a few months since Copper Beech has been FHA certified.
Abend, who specializes in homes in West Hartford and the West End of Hartford, says the complex was re certified at the request of one of her clients who was selling her unit.
Many complexes, she said, don’t want to bother with having FHA certification because of the paperwork and cost.
And at least in one West Hartford complex, the board of directors voted against seeking recertification fearing that it will open the doors to less financially able buyers. At some complexes, boards don’t want younger people purchasing units because they are nervous of having too much noise and other issues.
“That is short-sighted,” said Abend, as it reduces the pool of potential buyers. Most condo buyers are either just starting out or are downsizing.
According to real estate columnist Kenneth R. Harney the new rules that went into effect last week replace one that resulted in most condos no longer being eligible for low-down payment FHA guaranteed loans or for reverse mortgages.
“Though the previous rules focused on entire buildings, individual unit owners seeking to sell often have taken the brunt. Last year, one townhouse owner in Calabasas, Calif., Ryan O’Quinn, described his experience with his community’s failure to gain FHA certification as “a nightmare.” He lost four signed sales offers and had to cut the asking price on his condo by $81,000 because most buyers wanted to use FHA loans. Andrew Fortin, vice president of government affairs for Associa, a condo and homeowner association management firm based in Dallas, said he saw condos last week in the Tampa area that could no longer be financed with FHA mortgages and are now selling for $15,000, all-cash.”
You can here https://entp.hud.gov/idapp/html/condlook.cfm to learn if a condo complex is certified by FHA.
Isn’t that discrimination making a statement that “the board of directors voted against seeking re-certification fearing that it will open the doors to less financially able buyers.” What are they implying? Maybe a spouse has lost their job and only one income in the house. What if someone has been forced to retire and now their income is lower. Or a senior on social security and wants to be in a ranch condo. I am not comfortable with the statement.
Our complex was one of the 2,100 FHA certified late last year. Our management company felt it would be to our advantage, we agreed and voted to go forward. We had always been FHA approved because our complex has less than 10% rental units. At the time the law changed the web was full of ads and the cost was quite high. However, our management company searched and found a local attorney, willing to do the necessary paperwork at a reasonable charge and–we were certified quite quickly. Unit owners may not realize that if a complex is not at least 51% owner occupied, it won’t qualify for FHA certification. Now FHA requires a lot more information (our budgets, number of foreclosures, lawsuits, etc.). Most conventional mortgages require a person to have at least two years of current employment. Therefore, if a person changes jobs (even for a better one) less than two years before applying for a mortgage, they woud have to apply for an FHA mortgage. Some reasons for associations rejecting the FHA certification indicates that some boards don’t make informed decisions.
Our condo was FHA approved for a long time. A year ago we lost the certification. However, no one was informed of this, nor was there any meeting to discuss it, nor was any vote done in terms of applying for reinstatement. In our case it was told to me that our board would not pay $800. for some required documents to be provided, and they also did not want “poor people” in the building. I have lost 53% of the market value in my unit since May, 2007. When I applied for a modification, I was offered one backed by FHA. I could not accept the modification. Another owner who has been here a long time could not get a reverse mortgage that she needs.
From what I read on your site, it appears that condo boards can make these unilateral decisions that can seriously affect people’s lives. I think there should be some kind of legislation requiring at least more transparency when an issue like this is before a board so that at the very least unit owners can offer comments and concerns.
Unfortunately the real estate market has spiraled downwards since 2007 and everyone in CT (in fact most of the country) has lost value in their real estate purchases. The market value has nothing to do with condo board decisions, it is the reality of the market itself. Too bad your board decided against FHA certification–$800 was a very reasonable price since most were charging $2500 and up. Perhaps you can attend the next condo board meeting with a few of your neighbors and appeal to the board and help them understand the results of their decision and how it has impacted you all. If folks purchased at the top of the market (which 2007 was) and put very little $$ down, they are now suffering from lack of value (and equity)–not board decisions. The same holds true with reverse mortgages. If you purchased in 2007 for $150,000 with very little down and now, in 2012 that same unit is valued at $120,000 (20% loss of value) and you have no equity built up–the only solution is to either wait out the market and hope it goes higher or “short sale” (if you are selling)the home (which you need to have the bank’s approval for). Also many folks may have refinanced when the market was high and took out most of the equity and now that the market has decreased in value they find themselves looking into an “empty pit” and trying to figure out how it happened. I recall a saying awhile back that still applies today: “Don’t use your home as a piggy bank.”
What are these new rules that went into effect last week, as stated in the article (as I have copied into my posting here)? My condo assoc is having lots of trouble re-certifying. FHA makes us keep refiling all docs just for one issue. Then the refiled docs that were previously ok are no longer valid.
“According to real estate columnist Kenneth R. Harney the new rules that went into effect last week replace one that resulted in most condos no longer being eligible for low-down payment FHA guaranteed loans or for reverse mortgages.”
EAST GATE CONDO IN HAMDEN NEEDS FHA. WE MUST ALSO TRY TO GET THIS ROGUE BOARD TO STOP MAKING THE RULES AS THEY GO. MOST OF ALL, WE ELECTED THEM TO WATCH OVER EAST GATE AND ALL THEY DO IS KEEP CRACKING THAT WHIP!
A condo association can use a sponsored consultant to secure FHA certification rather than an attorney or their property management company. I completed the successful certification for my association in 4-6 weeks. My services are available to other associations and I can be contacted through my email address.
Laura, I would appreciate your E-Mail address and information as to getting FHA certification. My association is moving too slow and with half a heart as if they really don’t want to do it. I am sure they will cite costs of attorney etc. If you can give me an idea of what the cost and procedure is when you do it, I have then an alternate proposal for them. I appreciate your attention to this. I feel it is necessary for our development to be certified. Thank you and I await your reply. It would be a good thing if our correspondence were not published on this site.
Hi Laura, I am contacting you for my mom who lives in a condo in Simsbury. The wise board decided they will not cooperate for reverse mortgages and become FHA approved. Is there a work around if your Board won’t cooperate? We will pay the fee. thanks for your time.
Nancy
Hi Nancy – most complexes in Ct are NOT FHA approved. Sorry, no work around but there are plenty of good mortgages available.
Laura,
I would appreciate your email address for fha certification info.
Thanks Marie