The United States Department of Housing and Urban Development (“HUD”) announced recertification deadlines for condominium projects that had received approval for FHA-backed mortgage insurance prior to October 1, 2008.
Initial Project Approval Dates Expiration Date
1972 – 1980 December 31, 2010
1981 – 1985 December 31, 2010
1986 – 1990 May 31, 2011
1991 – 1995 July 31, 2011
1996 – 2000 August 31, 2011
2001 – 2005 September 30, 2011
2006 – 2008 (Sept) March 31, 2011
In the past many association leaders viewed FHA financing negatively. The decline in real estate values and banking crisis has eliminated many options from conventional lenders. Lenders will not finance properties if the loan is not acceptable to the secondary market (Fannie Mae, Freddie Mac and the like). FHA requires a minimum down payment of only 3.5%, but it also requires proof of affordability and satisfactory credit scores. FHA guidelines limit housing costs to 31% of income which means a new buyer must earn 3 times the monthly mortgage and association dues.
Whether you think the economy is on its way to recovery, or gearing up for a double dip recession, having your community approved as a FHA/Fannie Mae eligible project is one way to increase the marketability of units in your condominium.
Fannie Mae is a government-sponsored enterprise (GSE) chartered by Congress with a stated mission to provide liquidity, stability and affordability to the U.S. housing and mortgage markets and to increase the amount of funds available in order to make homeownership and rental housing more available and affordable. Fannie Mae works with mortgage bankers, brokers and other primary mortgage market partners to help ensure they have funds to lend to home buyers at affordable rates.
If your unit owners are experiencing difficulty in selling or refinancing their units, and your community is not a Fannie Mae or FHA approved project, you may want to investigate whether it would be worthwhile for your project to become approved. Fannie Mae or FHA approval just may bring more buyers to the table for those units “for sale” because financing will be more readily available. Additionally, the increased marketability of those units currently for sale in a Fannie Mae or FHA approved project not only helps the current sellers, but also serves to increase the value of all units in the condominium. This will not only help owners currently looking to sell or refinance, but will also help those unit owners who may wish to sell or refinance their units in the future.
While there are fees associated with the application for Fannie Mae or FHA project approval and the securing of an attorney review letter in support of same, the unit owners of your condominium, whether or not their units are on the market at the current time, might agree that such costs and fees are worthwhile to assist in the free flow of funds to be lent to homebuyers in your condominium at affordable rates.
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