FHA Condo Approval Specialist: FHA Won’t Dictate How You Run Your Condominium

FHA Won’t Dictate How You Run Your Condominium

FHA Won’t Dictate How You Run Your Condominium

fha condo approvalWe have been working with one of our clients for many months because the Board has been reluctant to provide the necessary information to us.  It recently surfaced that they have concerns that once the condominium is approved by FHA, the Federal Government will have the power to dictate how the condominium is run.

The couple asked us to compose an email that they could present to the Board that might allay the fears of the members.  While this email is too long to post here, you can read the full version HERE.

We believe that part of the misconception is that FHA is a division of HUD.  HUD has other divisions which provides housing subsidies for low- and moderate-income folks.  It also builds, owns and manages housing facilities for these folks as well.  However, FHA is not linked to these other divisions except that they are all branches of HUD.

The Board noted that they “didn’t want the Federal Government’s dirty hands in the affairs of our association”.  It became clear that the Board thought that the FHA approval would mean that the condominium would then be a HUD community which would give it the right to tell the association how it should be managed.

The fact of the matter is that the FHA project approval is merely a “stamp of approval” that the condominium meets the minimum requirements for FHA loans.  Without it, unit owners and potential buyers would not have the ability to finance units with FHA loans.

In our case, we are working with unit owners to obtain the FHA project approval.  This is necessary because they are attempting to obtain a reverse mortgage for their condo unit which will provide them with additional monthly revenue by utilizing the equity in their unit, which is substantial.

Once approved, neither HUD nor FHA will be given any power to control how the condominium is run.  In fact, if the association decides to change its rules, amend its legal documents or make other internal changes, the condominium will lose its FHA approval.

The only time FHA or HUD would have the ability to influence the operations of the condominium is if it receives title to a unit through the process of foreclosure or deed in lieu thereof.  Even if this were to happen, HUD would then be a unit owner and its power would be limited to that of an ordinary unit owner.  It would have the ability to vote on issues of the association subject to the limitations as laid out in the legal documents.  This is no different than if a conventional (or other) lender receives title through the process of law.

Hopefully, the email will clear up any confusion that Board has so that these folks can get their reverse mortgage.


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

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Comment balloon 6 commentsReadySetLoan Condo Approval Team • July 23 2015 11:40AM


Eric, great story. Hope your assistance in educating the board helped your clients meet their objective.  We look forward to a follow up.

Posted by JOE RYSTROM & TEAM, Real Estate Professionals almost 4 years ago

Great post, Eric. I always try to remember that board members in any home owner association are "volunteers" and it can't be assumed that they understand the nuances of such issues. They need all the educating they can get.

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (Coldwell Banker Residential Brokerage ) almost 4 years ago

This is proof, or at least supports my firm belief, that homeowners comprising their board are IDIOTS.  If they do not know what they are doing they have no business sitting on the board. Don't get me started!

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) almost 4 years ago

Eric this is what happens when decisions are made from assumptions instead of facts.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) almost 4 years ago

Good morning Eric. Thank you for sharing your post, it is so hard to understand how a board would come to this thought process. You would think some of them would be smart enough, maybe not.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) almost 4 years ago

Thank you for your comment Joe.  No updates as of yet!

Thank you for reading and your comment Nina Hollander .  Hopefully these Board members are open to being educated.

Kathleen Daniels - some of them are just power hungry but I have seen many who just want to do a good job.

I completely agree George Souto .  Education is more than half of my business, as it is yours.

I would think so as well Joe Petrowsky . The cost of the units in this project are over $1 million.  Unless inherited, these folks must have some smarts.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) almost 4 years ago