Why Aren't These Condominiums Approved with FHA?
In compiling data for condominium market reports, I spend time on the FHA Approved Condominiums List. It is a public site that any of us can visit and look up which condominiums are approved with FHA and which were rejected and why.
Sometimes the projects have serious issues that cause their rejection but quite often, projects are rejected for simple reasons and that may be easily fixed. I scratch my head thinking about why someone would go through all the work to submit a package for approval only to not clear up the rectifiable outstanding conditions.
Here are some examples of condominiums that were rejected that probably should be approved right now.
Ashmead Commons was rejected by FHA on 5/28/2012 for missing Appendix A (Project Certification), By-laws and purpose and terms of the outstanding loan.
This should have been cleared up by the end of June 2012 unless someone wasn’t willing to sign the Appendix A, the project cannot locate or does not have By-laws or the loan was enormous. To date (knock on wood), I have not had a project not get approved because it had an outstanding loan.
Dartmoor was rejected in November 2011 for a whole litany of reasons. I know this looks very bad but really it’s not. Whoever submitted this package clearly had no idea what they were doing as many of the required documents were omitted from the submission package.
The submitter failed to include Appendix A (Project Certification), Appendix E (Cover Letter), estimated date of construction completion, HOA tax ID, Bylaws, Articles of Incorporation, financial documents, proof of insurance, analysis of the special assessment and a FEMA flood map. ALL of these are required documents and should have been included in the submission package.
Willow Brook was rejected in April 2012 for missing documents including Appendix A, evidence that no one entity owns more than 10% of the units and a balance sheet. At the time, FHA’s guideline stated that no one entity could own more than 10% of the units. This has been superseded by Mortgagee Letter 12-18 in September 2012 which raised this ratio to 50%.
In any of these cases, it would have been of great benefit to the Associations to have hired a consultant to facilitate the process. While the list of required documents for an FHA condominium project approval is a short one, the list of requirements if fairly lengthy and involved.
Image courtesy of David Castillo Dominici/freedigitalphotos.net
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 firstname.lastname@example.org or call me at 404-433-4565. I will be happy to answer any of your questions.
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Check out our article in Common Interest magazine on page 19!