FHA Condo Approval Specialist: Can We Not Send that Document to FHA?

Can We Not Send that Document to FHA?

Can We Not Send that Document to FHA?

fha condo approvalWe are currently processing a 2-year FHA recertification for a small 6-unit condominium.  It was approved with FHA in June of 2013 so it should be a piece of cake, right?  Well, maybe not…

Our contact with the association hired us after reading a few of our blogs.  He called when he had some questions regarding FHA loan concentration limits.  Satisfied with our level of understanding of the FHA guidelines and process, he hired us to help him.

During our process of collecting the documents, we uncovered an Amendment to the Declaration filed in 2012, which was prior to the project’s previous approval (nice alliteration).  The Amendment stated that as of the date of filing, all units must now only be owner-occupied and gave powers to the Board to evict tenants and levy penalties against the unit owners if they leased their units.

Because leasing is not allowed in the project at all, FHA will not recertify this project.  FHA states that at least one unit in any condominium project must be allowed to be leased; the outright restriction of leasing if forbidden.

I brought this to the attention of our client.  He was baffled because they were approved in 2013.  I said that the rules hadn’t changed since then so the only potential reason was that the Amendment wasn’t provided to FHA during the original approval process.

He asked the next logical question: “Can we not supply that document to FHA?"

I replied: “Part of the submission package is a document that we sign certifying that the information provided is true, accurate and complete and that the project meets FHA’s guidelines.  With knowledge of the Amendment, signing this form constitutes fraud and the penalty can be 20 years imprisonment and/or $1,000,000 fine.  This is something that we simply won’t do.”

He agreed and retracted his question and posed a second asking what can be done to correct this.  I told him that they would have to file an Amendment on the land records to remove this restriction.  Currently, he is working with the association’s attorney to draft an amendment that will allow a maximum of 3 units to be leased at any given time.  This leasing restriction does meet FHA’s guidelines.

Top Photo Credit: (c) Can Stock Photo / kenhurst

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

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Eric Boucher  This is wonderful news . I am so happy when I hear condo associations working to re-certify their FHA approvals . It really helps with the value of their property.

Posted by Hannah Williams, Expertise NE Philadelphia & Bucks 215-953-8818 (Re/Max Eastern inc.) over 2 years ago

Why can the previous application be amended?

New information usually permits things like this.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 2 years ago

Hannah Williams - yes this is good news.  We do our best to push recertification and I can see that you appreciate it too!

Lenn Harley - I am not sure what you are asking.  Their approval expires soon and they are getting recertified.  However, when they were approved last time, they had a leasing restriction that disallowed leasing of the units.  This does not meet FHA's guidelines and most likely the amendment that created the restriction was omitted during the last submission.  We can't do this so the association recorded an amendment to restrict leasing to 3 units maximum.  Leasing of at least one unit must be allowed in the condominium to meet FHA's requirements.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 2 years ago

Eric you did the right thing.  Turning in a fraudulent application is nothing you want your name associated with.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 2 years ago

Oh yes, always letting those we represent know what we can and cannot do is so important.  Great post.

Posted by Paula McDonald, Magnolia Realty ~ Granbury, TX 936-203-0279 (Magnolia Realty ~ Granbury) over 2 years ago

It looks like an amendment will do the trick.  Hopefully, it won't take too long.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 2 years ago

Good morning Eric. I am not sure why we continue to expect common sense. This stuff just never surprises me.

Make it a great weekend!

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 2 years ago

Hi Eric.  Making the rental of your unit against condo rules is ridiculous.  Create an amendment to over turn that ridiculous one.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) over 2 years ago

Eric Boucher wonder why someone would like to hide anything from FHA!

It's like saying I made the money but don't want to show it on my 1040!

Good they are working with you - to get proper guidance.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 2 years ago

Not at all George Souto .  Call me naive, but I don't believe that he was suggesting that we commit fraud even though it came out that way.

Thank you Paula.

It took two days to get the amendment filed Joan Whitebook 

Hi Joe Petrowsky - I think that he was exasperated and didn't consider what his question was asking.

I agree Conrad Allen but I see leasing restrictions all the time.

Thank you Praful Thakkar .  We will get it done, but not that way.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 2 years ago


Many an association will get off track with rule making without realizing the impact of their decision.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 2 years ago