FHA Condo Approval Specialist: VA Loans Denied Because Condo Project Not On HUD’s List

VA Loans Denied Because Condo Project Not On HUD’s List


VA Loans Denied Because Condo Project Not On HUD’s List


I met today with a friend who is a Vice President for a national lender.  We were talking about reasons why condominium projects should get approved with HUD.  He threw me a curveball that I hadn’t previously heard.

He said that within the past couple of months, several VA loans have been denied by his lender because the condominium project was not on HUD’s approved condominiums list even though the project was on the VA approved condo list.

I was very surprised!

The VA has maintained an approved condominium project list just like HUD.  As a mortgage loan officer back in the mid-2000’s, I only wrote one VA loan in a condominium.  It was not on the VA’s approved list but I was able to get the loan done because it was on HUD’s approved list.

In 2009, when HUD released Mortgagee Letter ML09-46a/b, the VA “unpegged” itself from the HUD list and now requires condo projects to get on its approval list before VA loans are allowed in the project.

So, one would think that if the project is on the VA list then a VA loan in the project is acceptable, right?


This lender’s investors are not buying VA loans in condo projects that are not approved with HUD.

The reasoning behind it is: what is the resale-ability of the unit if the lender acquired the property via foreclosure?  Without being on the HUD approved condos list, it will be more difficult to sell.

This is the level of impact that a condo project approval with HUD has on the sale-ability of units in a project and why it is SO important for condominium projects to get approved with HUD.

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

ready set loan condo team


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

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Comment balloon 33 commentsReadySetLoan Condo Approval Team • August 09 2013 11:54AM


Eric-I find condo units are more challenging to get sold in this area than other parts of the country. It seems the VA and HUD approval are both pretty high bars to climb to get approved. Thanks for providing another caution regarding what it takes to get an approved loan for a condo.

Posted by Wayne Johnson, San Antonio REALTOR, San Antonio Homes For Sale (Coldwell Banker D'Ann Harper REALTORS®) almost 6 years ago

Eric -- thank you for this important piece of information.  I will be sure to check both lists in the future when looking at VA funding for condo.

Posted by Steven Cook (No Longer Processing Mortgages.) almost 6 years ago

Eric, I am dealing with a condo issue now because the complex lost their FHA eligibility. Even though the seller and over 50% of the condo owners in this complex have FHA loans, because the entire complex lost the approval, conventional is the only option. These are lower income properties, and it was difficult enough finding someone with 3.5% down, and now it got worse...

Posted by David & Annette Rollins (Century 21 Elite) almost 6 years ago

Condo units are definitely hard to finance especially when you are dealing with FHA financing. Getting a hold of the condo cert right away is always good practice in lending on those communities.  

Posted by Ron Saporito, Palm Desert, CA Real Estate & Mortgage Broker Since 2003, Call (760)574-8486. www.JustListedinPalmDesert.com (Ronald Christopher & Associates. Proudly serving Palm Desert, La Quinta, Indio, Coachella, Rancho Mirage, Palm Springs.) almost 6 years ago

On a good note here FHA is relooking at their requirements and position on the approval and recert process to make it easier for projects to become FHA approved. While only in talking phase at least its a step in the right direction to cure this very thing!

Posted by David Shamansky, Creative, Aggressive & 560 FICO - OK, Colorado Mtg (US Mortgages - David Shamansky) almost 6 years ago

Thank you for your comments!

Wayne- VA and HUD condo approvals aren't as difficult to obtain as most people think...especially when working with a seasoned professional :)

David & Annette - I sent you a message.  There may be a solution.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) almost 6 years ago

I also heard about the FHA looking into easing their requirements on condo projects.  I really don't think anything will be done to ease it as the new Consumer Protection Bureau will have to be consulted likely.

Posted by Jay & Michelle Lieberman, Creating Calm in the Buying and Selling Chaos (Keller Williams World Class) almost 6 years ago

I wonder why it's so difficult for home buyers to buy with VA loans? It seems our veterans have the hardest time buying when it should be easy for them to use their VA benefit to buy a home.

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) almost 6 years ago

Some investors are coming up with requirements that other investors are not.  One must work carefully with the mortage company to make sure that the investor they plan to go with has the least number of hoops to jump through.  I won't go into details here, but just had this experience with Chase.. and thank goodness we could swtich investors  :).. be aware.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) almost 6 years ago

A well deserved feature. Important topic that you shared with all of us. The information you share about the condominium world is priceless.

Make it a great weekend!

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) almost 6 years ago
Well that is interesting. Check everything out in real estate and then recheck.
Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) almost 6 years ago

This still a very little understood issue by townhome buyers and sellers regarding not just VA but FHA mortgages. When I've reviewed the impact of this issue on the sale of a client's townhome, they are usually shocked beyond belief.

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (Coldwell Banker Residential Brokerage ) almost 6 years ago

Unbelievable. Being on one list should certify the project - just decide which one don't forced associations to deal with 2 government entities.

I have rallied over the last year as most homeowners don't understand the impact to their subdivision by not being approved. I'm horse trying to get the word out.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) almost 6 years ago

Eric, the reasoning behind this does make sense should the property go to foreclosure.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA almost 6 years ago

That is a lender "overlay" requirement that I have not run into. My primary focus of business is VA loans and if the lender I worked with were to adopt this overlay that would be reason enough for me to quit and change lenders. Fortunately, the lender I work for does not have this overlay. I've closed a lot of VA loans on condo's, and the loan process is actually very easy, as long as I've done my homework upfront. 

Your blog looks like a great source of information reagrding FHA project approval. I'm bookmarking for future reference.

Posted by Tim Storm, Orange County FHA and VA Home Loan Specialist (Fairway Independent Mortgage Corporation) almost 6 years ago

Thank you all for your comments!

Tim: you make an excellent point. This is a lender overlay but I wanted to bring it to the attention of the community because if some investors are requiring this, it could spread to others but it could also affect pricing.  Granted, there are a wide array of investors.  For example, some lenders are now allowing FHA loans with 580 credit scores!  Who thought we'd see that again?

Lyn/Nina: thank you for advocating for HUD condo approvals.  HOA's are still not understanding the impact of the approval.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) almost 6 years ago
The weakest link in this is the failure of condominium associations to have very little understanding of this process. Their boards have a fiduciary responsibility to the member owners but more often than not have no clue as to what their responsibility is. Volunteers are not trained and the management companies are even more clueless and provide little or no direction on this subject. The amount of work expended for what should be a no brainer is also no surprise. It mirrors government in general.
Posted by William Johnson, Retired Real Estate Professional (Retired) almost 6 years ago

I have had this happen to me. I had one mortgage professional assist the HOA to get back on the list because it had expired. Closed the deal!

Posted by Harry F. D'Elia, Investor , Mentor, GRI, Radio, CIPS, REOs, ABR (RentVest) almost 6 years ago

I have been saying for years that the VA and FHA should merge their loan programs and let VA loans just be a branch under HUD.  Just shows how inefficient it is to deal with anything remotely related to the government.

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) almost 6 years ago

That's a lender overlay that I have not heard of before.  Just one more reason, the smaller lenders are struggling to compete.  Unless you are direct seller to the agencies, you will be stuck with a lot of Secondary Marketing restrictions.

Posted by Rodney Mason, AL, FL, GA, SC, & TN (Angel Oak Home Loans) almost 6 years ago

>>This still a very little understood issue by townhome buyers and sellers regarding not just VA but FHA mortgages

Townhomes aren't impacted - only Condos.

Posted by Raymond Denton, Shady Canyon Specialist (Homesmart / Evergreen Realty) almost 6 years ago

Prime Lending has a portfolio program for Condos that aren't HUD approved.  The down payment is 3%, with private mortgage insurance.  Any Agent who does condos should be aware of that program.

Posted by Raymond Denton, Shady Canyon Specialist (Homesmart / Evergreen Realty) almost 6 years ago

I think those "approved" lists should be eliminated entirely.  Just put simple criteria like lenders do - nothing in litigation, reserves at certain levels, and that's it. 

Posted by Bryan Robertson almost 6 years ago

Timely post for me!  I have two condos listed in a complex that is not HUD approved.  I've never sold a condo before so I couldn't figure out why they weren't selling.  Finally realized, after some research, what the problem was.  I worked with the HOA to compile the information needed to submit to HUD.  Fingers crossed that they get approved!  These poor homeowners had no idea why they couldn't sell their condos....they were so affordable and in a perfect location.  In the meantime their property values have plummeted.

Posted by Kris Deaton, Kris Deaton, Realtor/Designer/Stager (Staged 2 Sold Realty) almost 6 years ago

The more the government gets involved... the tougher business becomes. It's that way no matter what business you're in. 

Posted by Marte Cliff, Your real estate writer (Marte Cliff Copywriting) almost 6 years ago

William: I think that little is known about this outside of those who have had to deal with it or those in my field who work with it on a daily basis.

Harry: that's great! Most HOA's don't know how the expiration of the approval impacts them, if they even know it expired at all!

Rob, that is a sound idea but we will never see it.  The VA and HUD do NOT communicate.  There is an animosity between them that is so strong that they can't even speak to each other (source: high-ranking HUD employee).

Rodney, as mentioned above in a previous comment, this is a lender overlay but that doesn't mean that more end-investors won't follow.

Raymond, I will contact you about your condo portfolio program.

Bryan: don't say that!  Then I would have to start another company doing something else :)

Kris- good luck!  If you have any questions about the approval process, please contact me.

Marte: Agreed!  It almost seems like it is done purposefully.


Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) almost 6 years ago

Interesting post and information. I'm certain, we as professionals, should know this invaluable information before we list or accept a buyer that fits this scenario. Thanks for sharing.

Posted by Kimo Jarrett, Pro Lifestyle Solutions (WikiWiki Realty) almost 6 years ago

Wow! That would really be an unexpected and unpleasant surprise. Thank you for sharing, I will now know to check that out for my VA buyers.

Posted by Liane Thomas -Top Listing Agent, Bringing you Home! (BROKER Allison James Estates & Homes BRE 01885684) almost 6 years ago

I have had this problem, need to know about it up front

Posted by Jack O'Neal (Conway Real Estate) almost 6 years ago

Hi Eric, since when do you expect two govenment agencies to talk to each other?  lol

Posted by Bob Miller, The Ocala Dream Team (Keller Williams Cornerstone Realty) almost 6 years ago

Hi Eric, Don't expect me to comment on twenty posts per week. I think it is over-kill.

As for the approved list over-lay, if I was the investor I would have the same requirement. Re-sell-ability (is there such a work?) is very important.

And as for 580 FICO scores being allowed, all I can say is "Good." But it is not as simple as that, the lower scores require manual underwriting and may not get approved anyway.

Bill Roberts

Posted by Bill Roberts, "Baby Boomer" Retirement Planner (Brooks and Dunphy Real Estate) almost 5 years ago

Have really only had one condo not approved by VA. The reason was about 50% of the units were long term rentals.

Posted by Bill Reddington, Destin Florida Real Estate (Re/max Southern Realty) almost 5 years ago

Hi Bill - no worries, you won't see 20 posts a week from me.  I'm sticking with the 7-10 range.

Hi Bill - yes, requiring a miniumum lease term of more than 12 months is not agreeable to the VA

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) almost 5 years ago