FHA Condo Approval Specialist: July 2013

FHA Condo Approvals – Pending Sales Can Count as Owner-Occupied

FHA Condo Approvals – Pending Sales Can Count as Owner-Occupied

 

In 2011, I was contacted by a gentleman in Texas whose family had invested in a failing condominium project.  The purchased roughly 70% of the units and invested their own capital into the common elements and exterior of the buildings and remodeled most of the units that they purchased.

Although there is a large financial up-side for the family, they did a really nice job improving the project and helping to right its financial ship.

They were missing a piece of the puzzle though: how are they going to sell the units to cash out on their investment?

FHA, VA, Fannie and Freddie would never allow loans in a project where one entity owns more than 10% of the units.  They would have to sell the units using private financing until the family owned 10% or less of the units.

This is what I told the gentleman who was not at all pleased.  They had been looking for avenues to help buyers to arrange financing to purchase the units and were not able to do so.

Then, by a stroke of luck, HUD released Mortgagee Letter 12-18 which provided temporary guidance allowing a single entity to own up to 50% of the units in the project.  I was told that this modification was to aid situations just like this one!

I contacted the gentleman to notify him of the changes.  We then strategized how the family could reduce their ownership to under 50%

This appears to be a catch-22 doesn’t it?  They have to sell 20 units to get a HUD approval but they can’t sell the units without a HUD approval!

This is the cool part…

HUD allows units under bona-fide purchase and sale agreements to future owner-occupants to be counted as owner-occupied units.

Bingo!  We have our solution.  The family needs to find 20 ready, willing and able buyers who have the flexibility for a closing date to allow for the approval from HUD to come through.

In only 3 months, they were able to locate 23 buyers that fit these criteria and they were thrilled.

As an aside, this also works for conversions and new construction projects.

The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA.  We have assisted nearly 200 condominiums and we can help your association.

 

ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.

 

Please contact us with any questions regarding FHA or VA condominium project approvals.  You can email me at askeric@readysetloan.com or call me at 404-433-4565. I will be happy to answer any of your questions.

 


FHA/VA Condo Approval Specialist

404-433-4565 Cell Phone

860-644-3772 Fax Phone

eric.boucher@readysetloan.com
ready set loan condo team

 

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 Check out our article in Common Interest magazine on page 19!

Find Eric Boucher with ReadySetLoan Condo Team on Google+

Comment balloon 2 commentsReadySetLoan Condo Approval Team • July 17 2013 12:55PM
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